New  York  State 
Personal 
Income  Tax  Law 


A Synopsis  of  the 
Law  and  Regulations 


COLUMBIA 

TRUST 

COMPANY 


Columbia  Trust  Company 

In  Financial  District:  60  Broadway 
In  Shopping  Centre:  5th  Avenue  and  34th  Street 
In  Harlem : 125th  Street  and  Lenox  Avenue 
In  Bronx : 148th  Street  and  Third  Avenue 

New  York 


( 

] 

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1 


New  York  State 
Personal 

Income  Tax  Law 


A Synopsis  of  the 
Law  and  Regulations 


Columbia  Trust  Company 

New  York 


Copyright  1920 
By  Columbia  Trust  Company 


FOREWORD 


) 


<r 


^TpHE  following  synopsis  of  the  New  York  State  Personal 
Income  Tax  Law,  which  imposes  a tax  upon  the  net  in- 
come of  residents  and  nonresidents  of  the  State,  together  with 
information  taken  from  the  official  Regulations  issued  by  the 
State  Comptroller  in  explanation  of  the  Law,  is  offered  as  a 
practical  guide  to  those  required  under  the  Law  to  file  returns 
with  the  State  Comptroller. 

It  is  important  that  every  person  whose  income  will  be  subject 
to  the  Tax,  should  keep  an  accurate  list  of  all  amounts  of  income 
received  during  the  year.  Also,  a statement  of  all  losses  sus- 
tained either  in  business  or  otherwise,  business  expenses,  interest 
paid  on  indebtedness,  taxes,  bad  debts  and  all  other  facts  relating 
to  the  income  of  the  tax  payer. 

COLUMBIA  TRUST  COMPANY 
Main  Office,  60  Broadway 
Borough  of  Manhattan,  New  York  City 

Branch  Offices: 

34th  Street  and  Fifth  Avenue 
100  West  125th  Street 
148th  Street  and  Third  Avenue 


V 


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in  2017  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/newyorkstatepersOOnewy 


CONTENTS 

Page 


Accident  Insurance 

Amounts  received  through 17 

Accounting,  methods  of 24 

Inventories  23 

Actors 

Deductions  from  gross  income.  18 

Alimony  17 

Annuities  ...16 

When  received  by  non-resi- 


Ascertainment  of  Gain  or  Loss . . 22 

Bad  Debts 20 

Basis  of  Computing  Net  In- 
come   24 

Bond  Interest 

Tax-free  covenant 16 

Bonus  to  Employees ...........  18 

Calendar  Year 

Returns  made  on  basis  of 24 

Commutation  Ticket 21 

Compensation  Paid  other  than 

in  Cash 16 

Contributions,  charitable,  etc. 

Not  allowable  deductions  to 

partnerships  20 

By  nonresidents 20 

Corporations  9 

Credit  for  Taxes 24 

Debts,  worthless 20 

Decedent  11,13 

Deductions  17 

Allowed  estates  and  trusts. 20,  21 

Allowed  nonresidents 19,  20 

Bad  debts 20 

Bonus  to  employees 18 

Business  expenses 18 

Business  losses 19 

Contributions,  charitable, 

etc 20 

Depletion  20 

Depreciation  20 

Donations  to  employees 18 

Dues  17 

Executor’s  commissions 21 

Inheritance  taxes 19 

Interest  paid  on  indebtedness.  .19 
Losses  not  connected  with 

business  19 

Professional  expenses.., 18 

Property  losses 20 

Taxes  19 

Trustees’  commissions 21 

Dependents 10 

Depletion  20 

Depreciation  ..... .20 

District  Offices,  location  of 27 

Dividends  23 

Nonresidents  23 


Page 


Stock  dividends 23 

When  income 23 

Dues  17 

Estates  and  Trusts 10 

Classification  of 13 

Computation  of 12,13 

Deductions  allowed 13,  20 

Income  of 12,13 

Nonresidents  13,  14 

Payment  of  tax  by  beneficiary . 13 
Payment  of  tax  by  fiduciary..  13 

Resident  14 

Estate  Taxes,  Federal 19 

Executors 20 

Exempt  Income 16,  17 

Nonresidents  16 

Exemption  of  Certain  Personal 

Property  from  Taxation 25 

Expenses  17 

Actors  18 

Business  17 

Estates  and  Trusts 20,  21 

Professional  18 

Exchange  of  Property 

Determining  gain  or  loss 22 

Extension  of  Time 26,27 

Fiduciary 

Definition  of 12 

Return  by 12,13 

Tax  not  payable  by 13 

Tax  payable  by 13 

Fire  Insurance 

On  residence,  premiums  not 

deductible  21 

Fiscal  Year 

Return  made  on  basis  of 24 

Gains  and  Profits 
When  included  in  gross  in- 
come   15 

Gain  or  Loss 

Determination  of 22 

Gifts 22 

Gross  Income 

Definition 14 

Of  nonresidents 15 

Of  residents 14,15 

What  included  in 14,15 

What  not  included  in 17 

Head  of  a Family 10,11,12 

Health  Insurance 

Amount  received  through 17 

Husband  and  Wife 10,11 

Income 

Gross 14 

Net  14 

Individuals 

Returns  by 10,  11,  12 


CONTENTS — Continued 


Page 

Information  and  Payment  at 


Source 25 

Information  Returns 

By  estates  and  trusts 13 

By  partnership 12,26 

By  withholding  agents 25,26 

Inheritance  Taxes  18 

Insurance  Policy 


Income  from  by  nonresidents.  16 
Income  from  by  residents. ..  16 

Interest 

New  York  State  and  munici- 


pal obligations 17 

Paid  on  indebtedness 18 

United  States  obligations 17 

Items  not  Deductible  ...21 

Insurance  premiums 21 

Commutation  ticket 21 

Inventories  23 

Life  Insurance 

Premiums  not  deductible 21 

Proceeds  of  policies  when  ex- 
empt   16 

Returned  premiums 16 

Losses 

In  business 19 

Not  connected  with  business..  19 
Property  19 

Market  Value  22 

Marriage  Settlement 17 

Married  Persons 10 

Minors  11 

N on-resident  minors 11 

Net  Income 

Definition  14 

Basis  of  computing 24 

New  York  City  Teachers’  Re- 
tirement Fund 16 

Nonresidents 

Allowable  deductions 20 

Annuities,  non-taxable 15,16 

Credit  for  taxes 24 

Gross  income  of 15 

Losses  as  deductions 19,20 

Personal  exemption 11 

Sale  of  securities  by 19 

Taxable  income 9 

Partnerships 

Charitable  contributions 20 

Individual  members  taxable. 9, 10 

Not  taxable  as  such 9 

Returns  by 12 

Returns  by  members  thereof. 9,  10 
Pensions 

Received  by  nonresidents ....  15 
Received  by  residents 15,16 


Page 

Personal  Exemptions 

Dependents  10 

Head  of  a family 10,11 

Husband  and  wife 10 

Married  persons 10 

Nonresidents  11 

Single  persons 10 

Personal  Expenses  21 

Personal  Property 

Exempt  from  other  taxation.. 25 

Rates  of  Tax 10 

Resident 

Definition  of 9 

Estate  and  Trust,  defined 14 

Returns 

Accounting  period 24 

Beneficiary  13 

Decedent  11 

Extension  of  time  for  filing. 26,  27 

Fiduciaries  12 

Filing  date 26 

Head  of  a family 11 

Husband  and  wife 10 

Individuals  10 

Of  information 25,  26 

Married  persons 10 

Minors  U 

Nonresidents  11 

Partnerships  12 

Penalties  26 

Period  covered  by 26 

Place  for  filing 26 

Residents  9,  10 

Salaries  and  Wages 
From  United  States  Govern- 
ment   17 

Included  in  gross  income.. 14,  15 

Of  nonresidents 15 

Securities 

Sale  of  by  nonresidents 19 

Shrinkage  in  value 19 

Single  Persons 10 

State  Officers,  compensation  of.  15 

Stock  Dividends  23 

Tax 

A personal  debt 9 

Method  of  payment 26 

Rate 10 

When  payable 26 

Unmarried  Persons 10 

Waiver  of  Penalty  by  Comp- 
troller   27 

Withholding  Agents 25,  26 

Extension  of  time  to  file  return  27 
When  to  make  return 26 


Note: — The  full  text  of  the  New  York  State  Personal  Income 
Tax  Law  follows  the  Summary  thereof  on  page  28. 


NEW  YORK  STATE  PERSONAL 
INCOME  TAX  LAW 

A SYNOPSIS  OF  THE  LAW  AND  REGULATIONS 


Who  Must  Pay  the  Tax — Every  resident  of  New  York  State 
must  pay  a tax  upon  his  entire  net  income,  as  defined  in  the  Act, 
which  includes  that  which  arises  from  every  source  within  or  with- 
out the  State,  exclusive  of  certain  deductions. 

The  word  “resident”  applies  only  to  natural  persons,  and  in- 
cludes for  the  purpose  of  determining  liability  to  the  tax  any 
person  who  at  any  time  during  the  last  six  months  of  the  calendar 
year  was  a resident  of  the  State  of  New  York.  ('Sec.  350  (7)). 

Every  non-resident  of  the  State  must  pay  a tax  upon  the  net 
income  from  all  property  owned  and  from  every  business,  trade, 
profession  or  occupation  carried  on  in  New  York  State.  (Sec. 
351.) 

The  tax,  in  addition  to  being  a tax  against  property,  business, 
trade,  profession  or  occupation,  is  declared  to  be  a personal  debt 
due  by  the  taxpayer  to  the  State  of  New  York.  This  provision 
will  enable  the  State  of  New  York  to  sue  for  the  amount  of  tax 
due,  and  upon  recovering  a judgment  against  the  taxpayer,  to 
enforce  collection  of  such  judgment  by  suit  and  execution  against 
the  property  of  a nonresident  taxpayer  in  the  State  of  his  resi- 
dence. (Sec.  351  (b)). 

Corporations  are  not  subject  to  the  tax.  (Sec.  350  (2)). 

Partnerships,  as  such  are  not  required  to  pay  a tax,  but  the 
partnership  is  required  to  file  a return  stating  specifically  the  items 
of  its  gross  income  and  the  deductions  allowed  and  setting  forth 
the  names  and  addresses  of  the  members  of  the  'firm  who  would 
be  entitled  to  share  in  the  distribution  of  the  net  income  of  the 
partnership*  and  showing  the  distributive  share  of  each  of  the 
partners,  whether  distributed  or  not.  (iSec.  368.)  The  individual 
partners  must  each  file  a return,  and  are  liable  for  the  tax  only  in 
their  individual  capacity,  and  each  partner  will  be  taxed  on  his 


10 


New  York  State  Personal  Income  Tax  Law 


distributive  share  of  the  net  income  of  the  partnership,  whether 
distributed  or  not.  (Sec.  364.) 

Estates  and  Trusts — The  act  applies  to  income  derived 
through  estates  or  trusts  by  the  beneficiaries  whether  distributed 
or  distributable.  (Sec.  365.) 

Rate  of  Tax — The  tax  imposed  is  as  follows : — 

On  the  first  $10,000  of  net  taxable  income. . . .1% 

On  the  next  $40,000  of  net  taxable  income. . . . 2 % 

On  the  excess  of  $50,000  of  net  taxable  income. 3% 

(Sec.  351.) 

Personal  Exemptions  Allowed — The  following  exemptions 
are  allowed  any  taxpayer: 

To  a single  person,  or  to  a married  person  not  living  with 
husband  or  wife,  $1,000. 

To  a married  person  living  with  husband  or  wife  and  to  the 
head  of  a family,  $2,000. 

A husband  and  wife  living  together  shall  receive  but  one  per- 
sonal exemption  of  $2,000  against  their  aggregate  net  in- 
come; and  in  case  they  make  separate  returns,  the  personal 
exemption  of  $2,000  shall  be  equally  divided  between  them. 
An  additional  exemption  of  $200  for  each  person  (other 
than  husband  or  wife)  dependent  upon  and  and  receiving 
his  chief  support  from  the  taxpayer,  if  such  dependent  is 
under  eighteen  years  of  age  or  is  incapable  of  self  support 
because  mentally  or  physically  defective.  (Sec.  362.) 

RETURNS— 

Individuals:  Every  taxpayer  having  a net  income  of 
$1,000,  or  over,  if  single,  or  if  married  and  not  living  with 
husband  or  wife,  or  of  $2,000  if  married  and  living  with  hus- 
band or  wife,  shall  make  a return  stating  the  items  of  his 
gross  income  and  the  deductions  and  credits  allowed  by  the 
Act.  If  a husband  and  wife  living  together  have  an  aggre- 
gate net  income  of  $2,000,  or  over,  each  shall  make  such 
return  unless  the  income  of  each  is  included  in  a single  joint 
return. 


A Synopsis  of  the  Law  and  Regulations 


11 


A nonresident  taxpayer  is  entitled  to  the  personal  exemp- 
tions, but  is  not  entitled  to  the  deductions  allowed  resident 
taxpayers,  unless  a complete  return  is  made  of  his  gross  in- 
come both  within  and  without  the  State  of  New  York. 
(Sec.  367.) 

Minors — An  individual  under  21  years  of  age  is 
required  to  make  a return  of  income  if  he  has  a net  in- 
come of  his  own  of  $1,000,  or  over,  for  the  taxable  year. 
If  he  is  married  his  net  income  must  be  $2,000,  or  over, 
before  he  is  required  to  make  a return.  If  the  aggregate 
of  the  net  income  of  a minor  from  any  property  which 
he  possess,  and  from  any  funds  held  in  trust  for  him 
by  a Trustee  or  Guardian,  and  from  any  earnings  for  his 
own  use,  is  at  least  $1,000,  a return  must  be  made  by 
him  or  by  his  Guardian  or  some  other  person  charged 
with  the  care  of  his  person  or  property  for  him.  If  a 
minor  is  dependent  upon  his  parent,  who  appropriates 
his  earnings,  such  earnings  are  income  of  the  parent  and 
not  of  the  minor  for  the  purpose  of  the  tax.  Nonresident 
minors  must  make  return  in  the  same  manner  and  of  the 
same  classes  of  income  as  other  nonresidents. 

Decedent — If  the  net  income  of  a decedent  from  the 
beginning  of  a taxable  year  to  the  date  of  his  death  is 
$1,000,  if  unmarried,  or  $2,000,  if  married  and  living  with 
husband  or  wife,  the  executor  or  administrator  of  his 
estate  shall  make  a tax  return  for  such  decedent  cover- 
ing such  period  and  pay  the  tax  due  thereon. 

Head  of  a Family  is  a person,  either  resident  or 
nonresident,  who  actually  supports  and  maintains  in  one 
household  one  or  more  individuals,  who  are  closely  con- 
nected with  him  by  blood,  marriage  or  adoption,  and 
whose  right  to  exercise  family  control  and  provide  for 
these  dependent  individuals  is  based  upon  some  moral  or 
legal  obligation.  Whether  or  not  an  individual  is  the 


12 


New  York  State  Personal  Income  Tax  Law 


head  of  a family  or  has  dependents  is  immaterial  in  de- 
termining his  liability  to  render  a return.  It  follows, 
therefore,  that  although  a married  individual  living  with 
husband  or  wife  is  not  required  to  file  a return  where 
the  aggregate  net  income  is  less  than  $2,000,  neverthe- 
less the  head  of  a family  must  file  a return  if  the  net 
income  is  more  than  $1,000,  even  though  he  is  not  re- 
quired to  pay  a tax. 

A resident  alien  with  children  abroad  is  not  entitled  to 
the  exemption  of  a head  of  a family. 

Partnerships — Every  partnership  shall  make  a return 
specifying  its  gross  income  and  the  deductions  allowed  by  the 
Act,  giving  the  names  and  addresses  of  the  partners  and  their 
distributive  share.  The  return  must  be  sworn  to  by  one  of 
the  partners.  (Sec.  368.) 

Fiduciaries — Every  fiduciary,  which  term  means  a guar- 
dian, trustee,  executor,  administrator,  or  any  person,  whether 
individual  or  corporate,  acting  in  any  fiduciary  capacity  for 
any  person,  trust  or  estate,  excepting  receivers  appointed  by 
authority  of  law  in  possession  of  part  only  of  the  property  of 
a taxpayer,  must  file  a return  for  the  individual  or  estate  or 
trust  for  which  he  acts  in  the  following  cases : 

First — If  the  entire  income  of  an  individual  is  in  his 
charge,  and  the  net  income  of  the  individual  is  $1,000 
or  over  if  single,  or  if  married  and  not  living  with  hus- 
band or  wife,  or  $2,000  or  over  if  married  and  living 
with  husband  or  wife. 

Second — If  he  acts  (a)  for  an  estate  of  a deceased 
person  during  the  period  of  administration  or  settle- 
ment, whether  or  not  the  income  of  such  estate  is  paid 
or  credited  to  a beneficiary;  (b)  for  an  estate  or  trust 
the  income  of  which  is  accumulated  for  the  benefit  of 
unborn  or  unascertained  persons,  or  persons  with  con- 
tingent interests;  (c)  for  an  estate  or  trust  the  income 
of  which  is  held  for  future  distribution  under  the  terms 


A Synopsis  of  the  Law  and  Regulations 


13 


of  the  Will  or  Trust;  provided,  in  each  case  the  net 
income  of  such  estate  or  trust  is  $1,000  or  over. 

Third — If  he  acts  (a)  for  an  estate  or  trust  the 
income  of  which  is  to  be  distributed  periodically;  or  (b) 
if  he  acts  as  the  guardian  of  an  infant  whose  income 
is  subject  to  the  direction  of  the  Court,  provided  in  each 
case  the  distributed  or  distributive  share  of  a beneficiary 
is  $1,000  or  over.  (Sec.  369.) 

For  the  purpose  of  the  income  tax,  incomes  of  estates 
and  trusts  may  be  divided  into  two  classes : 

First — Income,  the  tax  upon  which  is  imposed  upon 
the  estate  or  trust,  and  the  tax  paid  by  the  fiduciary , 
consisting  of 

(a)  Income  received  by  estates  of  deceased  persons 
during  the  period  of  administration  or  settlement; 

(b)  Income  accumulated  in  trust  for  the  benefit  of 
unborn  or  unascertained  persons,  or  persons  with  con- 
tingent interests; 

(c)  Income  held  in  trust  for  future  distribution 
under  the  terms  of  the  will  or  trust. 

Second — Income,  the  tax  upon  which  is  imposed 
upon  and  paid  by  the  beneficiaries,  consisting  of 

(d)  Income  which  is  to  be  distributed  to  beneficiaries 
periodically ; 

(e)  Income  collected  by  the  guardian  of  an  infant 
to  be  held  or  distributed  as  the  Court  may  direct ; 

(f)  Income  of  the  estate  of  any  deceased  person 
which  during  the  period  of  administration  or  settlement 
is  properly  paid  or  credited  to  any  beneficiary. 

In  subdivision  (f ) above,  in  determining  the  net  income  of 
the  estate  of  any  deceased  person  during  the  period  of  admin- 
istration, there  may  be  deducted  the  amount  of  any  income 
properly  paid  or  credited  to  any  legatee,  heir,  or  other  bene- 
ficiary. A trust  created  by  a person  not  a resident,  and  an 
estate  of  a person  not  a resident  shall  be  subject  to  tax  only 
to  the  extent  to  which  individuals  other  than  residents  are 
liable.  (Sec.  365.) 


14 


New  York  State  Personal  Income  Tax  Law 


Resident  and  Nonresident  Estates  and  Trusts — If  the  dece- 
dent was  a resident  of  the  State  of  New  York  at  the  time  of  his 
death,  his  estate  is  a resident  estate,  and  any  trust  created  by  his 
will  is  a resident  trust.  If  the  decedent  was  a nonresident , then 
his  estate  is  a nonresident  estate,  and  any  trust  created  by  his  will 
is  a nonresident  trust.  Also,  if  the  creator  of  a voluntary  trust 
was  a resident  at  the  time  the  trust  was  created,  such  trust  is  a 
resident  trust,  but  if  he  was  a nonresident,  then  the  trust  is  a non- 
resident trust.  The  residence  of  the  (fiduciary  does  not  in  any 
sense  determine  whether  an  estate  or  trust  is  resident  or  non- 
resident. Whether  the  estate  or  trust  is  resident  or  nonresident  is 
material  only  with  respect  to  income  as  to  which  the  estate  or 
trust  is  the  taxable  entity.  When  the  beneficiary  is  the  taxable 
entity,  then  the  residence  or  nonresidence  of  the  beneficiary  is 
material. 

INCOME — 

Net  Income  means  the  gross  income  of  a taxpayer  less 
the  deductions  allowed  under  the  law  (Sec.  357).  The  statu- 
tory deductions  are  in  general,  though  not  exclusively,  expen- 
ditures other  than  capital  expenditures,  connected  with  the 
production  of  income. 

Gross  Income  includes  all  gains,  profits,  and  income 
derived  from 

1st — Salaries,  wages  or  compensation  for  personal 
service  of  whatever  kind  and  in  whatever  form  paid : or 
from 

2nd — Professions,  vocations,  trades,  businesses,  com- 
merce or  sales,  or  dealings  in  property,  whether  real  or 
personal : also  from 

3rd — Interest,  rent,  dividend,  securities,  or  the  trans- 
action of  any  business  carried  on  for  gain  or  profit,  or 
gains  or  profits  and  income  derived  from  any  source 
whatever  (Sec.  359). 


A Synopsis  of  the  Law  and  Regulations 


15 


When  Gains,  Profits,  etc.,  to  Be  Included  in  Gross  In- 
come— Gains,  profits  and  income  are  to  be  included  in  the 
gross  income  for  the  taxable  year  in  which  they  are  received 
by  the  taxpayer,  unless  they  are  included  when  they  accrue 
to  him  in  accordance  with  the  approved  method  of  accounting 
followed  by  him.  Income  which  is  credited  to  the  account  of 
or  set  apart  for  a taxpayer  and  which  may  be  drawn  upon  by 
him  at  any  time  is  subject  to  tax  for  the  year  during  which  so 
credited  or  set  apart,  although  not  then  actually  reduced  to 
possession. 

Gross  Income  of  Nonresidents — In  the  case  of  non- 
residents, gross  income  includes  only  the  gross  income  from 
sources  within  the  State  of  New  York,  but  shall  not  include 
annuities,  interest  on  bank  deposits,  interest  on  bonds,  notes, 
or  other  interest-bearing  obligations,  or  dividends  from  cor- 
porations, except  to  the  extent  to  which  the  same  shall  be  a 
part  of  income  from  any  business  or  occupation  carried  on 
in  New  York  State  subject  to  taxation  under  this  Act.  (Sec. 
359— Sub.-Div.  (3).) 

Compensation  of  State  Officers — Compensation  paid  its  of- 
ficers and  employees  by  the  State  of  New  York,  which  is  exempt 
from  tax  under  the  Federal  statute,  is  taxable  under  the  New 
York  statute. 

Pensions — When  received  by  a nonresident , a pension  of 
any  kind  is  not  taxable  income,  as  it  is  an  annuity,  and,  therefore, 
is  specifically  exempted  from  taxation  under  the  Act. 

When  received  by  a resident,  a pension  is  not  taxable  (a)  when 
received  from  the  United  'States  Government,  or  (b)  if  received 
as  compensation  for  personal  injuries  or  sickness  or  under  work- 
men’s compensation  acts  or  through  war  risk  insurance,  or  under 
any  law  for  the  benefit  or  relief  of  injured  members  of  the  mili- 
tary or  naval  forces  of  the  United  States.  Pensions  arising  upon 
the  retirement  for  disability  are  not  regarded  as  compensation  for 
personal  injuries  within  the  meaning  of  this  paragraph. 


16 


New  York  State  Personal  Income  Tax  Law 


Pensions  received  from  the  New  York  City  Teachers’  Retire- 
ment Fund  are  exempt  from  taxation. 

All  other  pensions  received  by  residents  are  taxable. 

If  the  recipient  has  contributed  to  the  fund  out  of  which  the 
pension  is  paid,  the  pension  receipts  are  taxable  only  when,  and 
to  the  extent  that,  they  exceed  the  aggregate  amount  of  all  pay- 
ments or  contributions  made  by  him  to  the  fund. 

Compensation  Paid  Other  Than  in  Cash — Where  services 
are  paid  for  with  something  other  than  money,  the  fair  market 
value  of  the  thing  taken  in  payment  at  the  time  such  payment  is 
made  is  the  amount  to  be  included  as  income. 

Tax-Free  Bond  Interest — The  amount  paid  for  or  to  a 
bondholder  by  an  obligor  pursuant  to  a tax-free  covenant  in  its 
bonds  is  in  the  nature  of  additional  interest  paid  the  bondholder 
and  must  be  included  in  his  gross  income.  He  is  not,  however,  en- 
titled to  deduct  such  income  tax  paid  on  his  behalf. 

Annuities  and  Insurance  Policies — Where  an  insured  re- 
ceives under  life  insurance,  endowment,  or  annuity  contracts  sums 
in  excess  of  the  premiums  paid  therefore,  such  excess  is  income 
for  the  year  of  its  receipt.  But  income  received  by  a nonresident 
from  an  annuity,  even  though  it  is  in  excess  of  the  amount  paid 
in,  is  not  taxable.  If,  however,  such  income  is  received  in  con- 
nection with  a trade  or  business  carried  on  in  New  York  State, 
the  income  of  which  is  itself  subject  to  tax,  then  such  income  from 
the  annuity  is  a part  of  the  income  of  the  business  and  is  taxable 
to  the  nonresident. 

Exempt  Income — Income  not  subject  to  tax  includes — 

(a)  Proceeds  of  life  insurance  policies  and  contracts  paid 
upon  the  death  of  the  insured  to  individual  beneficiaries  or 
to  the  estate  of  the  insured. 

(b)  Returned  premiums  received  by  the  insured  under 
life  insurance,  endowment  or  annuity  contracts. 

(c)  Value  of  property  acquired  by  gift,  bequest,  devise 
or  descent  (but  the  income  from  such  property  shall  be  in- 
cluded in  gross  income.) 


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17 


An  amount  of  principal  paid  under  a marriage  settlement 
is  a gift.  Neither  alimony  nor  an  allowance  based  on  a sepa- 
ration agreement  is  included  in  gross  income,  nor  is  either  an 
allowable  deduction. 

(d)  Interest  upon  the  obligations  of  the  United  States 
or  its  possessions ; or  on  securities  issued  under  the  provisions 
of  the  Federal  Farm  Loan  Act  of  July  17th,  1916;  or  on 
bonds  issued  by  the  War  Finance  Corporation ; or  on  obliga- 
tions of  the  State  of  New  York  or  of  any  municipal  corpora- 
tion or  political  division  thereof ; or  on  investments  upon 
which  the  investment  tax  has  been  paid  between  June  1,  1917, 
and  May  14,  1919,  during  the  period  of  years  for  which  such 
tax  shall  have  been  paid.  However,  the  income  from  securi- 
ties (1)  upon  which  the  investment  tax  was  paid  after  May 
14th,  1919,  or  (2)  upon  which  the  secured  debt  tax  or  the 
mortgage  tax  was  paid,  is  not  exempt  from  the  income  tax. 

(e)  Amounts  received  through  accident  or  health  insur- 
ance or  under  workmen’s  compensation  acts,  through  the 
War  Risk  Insurance  Act  or  under  any  law  for  the  benefit 
or  relief  of  injured  members  of  the  military  or  naval  forces 
of  the  United  States. 

(f)  Salaries,  wages  and  other  compensation  received 
from  the  United  States  by  officials  or  employees  thereof,  in- 
cluding persons  in  the  military  and  naval  forces  of  the 
United  States. 

(g)  Income  received  by  an  officer  of  a religious  denomi- 
nation, or  by  any  institution  or  trust  for  moral,  benevolent 
or  educational  purposes ; but  the  fees,  stipends,  personal  earn- 
ings or  other  private  income  of  such  officer  or  trustee  shall 
not  be  exempt.  (iSec.  359.) 

Deductions — In  computing  net  income  the  following  deduc- 
tions from  gross  income  are  allowed — 

(a)  All  ordinary  and  necessary  expenses  paid  or  incurred 
in  carrying  on  any  trade  or  business. 

Dues  paid  by  business  and  professional  men  to  Cham- 
bers of  Commerce  are  deductible  expenses.  The  Comptroller 
has,  however,  ruled  that  where  a tax  payer  is  not  in  business, 
his  membership  fee  in  a Chamber  of  Commerce  is  not  a de- 
ductible item.  Dues  to  Labor  Unions  and  organizations  are 
deductible,  where  no  part  of  such  dues  is  applied  toward  in- 
surance and  personal  benefits. 


18 


New  York  State  Personal  Income  Tax  Law 


Actors — In  computing  net  income,  an  actor  is  entitled 
to  deduct  from  gross  income  the  amounts  expended  for  cos- 
tumes and  other  items  of  wardrobe  used  for  professional  pur- 
poses, as  well  as  powder  and  grease  paints  which  are  neces- 
sarily used;  also  the  actual  and  necessary  traveling  expenses 
incurred  in  connection  with  the  rendering  of  professional 
services. 

Professional  Expenses — A professional  man  may  claim 
as  deductions,  the  cost  of  supplies  used  by  him  in  the  prac- 
tice of  his  profession,  expenses  paid  in  the  operation  and 
repair  of  an  automobile  used  in  making  professional  calls, 
dues  to  professional  societies  and  subscriptions  to  profes- 
sional journals,  office  rent,  cost  of  fuel,  light,  water,  tele- 
phone, etc.,  used  in  such  offices  and  the  salaries  of  office 
assistants.  Amounts  expended  for  books,  furniture  and  pro- 
fessional instruments  and  equipment  of  a permanent  charac- 
ter are  not  allowable  deductions,  but  a proper  allowance  for 
the  depreciation  of  such  capital  assets  may  be  deducted. 

Bonus  to  Employees — Gifts,  or  bonuses  to  employees 
will  constitute  allowable  deductions  from  gross  income  when 
such  payments  are  made  in  good  faith  and  as  additional  com- 
pensation for  services  actually  rendered  by  the  employees, 
provided  such  payments,  when  added  to  the  stipulated  sal- 
aries, do  not  exceed  a reasonable  compensation  for  the  serv- 
ices rendered.  Donations  made  to  employees  and  others 
which  do  not  have  in  them  the  element  of  compensation  or 
are  in  excess  of  reasonable  compensation  for  services,  are 
considered  gratuities  and  are  not  deductible  from  gross  in- 
come. 

(b)  All  interest  paid  or  accrued  during  the  taxable  year 
on  indebtedness. 

(c)  Taxes  paid  or  accrued,  other  than  income  taxes, 
imposed  by  the  United  States  or  by  any  State,  territory  or 
subdivision  thereof,  or  by  any  foreign  government,  not  in- 
cluding taxes  assessed  against  local  benefits  of  a kind  tend- 
ing to  increase  the  value  of  the  property  assessed. 

Inheritance  Taxes — State  inheritance  taxes  paid  by  the 
executor  or  administrator  of  an  estate  of  a deceased  person, 
which  are  provided  by  law  to  be  deducted  from  the  respective 
legacies  or  distributive  shares,  are  not  allowable  deductions 


A Synopsis  of  the  Law  and  Regulations 


19 


in  computing  the  net  income  of  such  estate  subject  to  tax, 
even  though  the  will  contains  a direction  to  pay  inheritance 
taxes  out  of  the  residuary  estate.  Since,  moreover,  the  tax 
is  imposed  upon  the  transfer  before  the  property  reaches  the 
legatee  or  distributee,  and  merely  diminishes  the  capital 
share  of  the  estate  received  by  him,  such  tax  is  not  imposed 
upon  the  legatee  or  distributee  and  is  not  an  allowable  deduc- 
tion from  his  income.  Similarly,  Federal  estate  taxes  are 
not  deductible. 

(d)  Losses  sustained  and  not  compensated  for  by  insur- 
ance or  otherwise,  if  incurred  in  trade  or  business. 

(e)  Losses  sustained  in  any  transaction  entered  into  for 
profit,  though  not  connected  with  trade  or  business. 

In  the  case  of  a nonresident  of  the  State  this  deduction  is 
allowable  only  as  to  such  transactions  in  real  property  or  in 
tangible  personal  property,  having  an  actual  situs  within  the 
'State. 

Shrinkage  in  Value  of  Securities — A person  possessing 
securities,  such  as  stocks  and  bonds,  cannot  deduct  from  gross 
income  any  amount  claimed  as  a loss  on  account  of  the 
shrinkage  in  value  of  such  securities  through  fluctuation  of 
the  market  or  otherwise.  The  loss  allowable  in  such  cases 
is  that  actually  suffered  when  the  securities  mature  or  are 
disposed  of. 

Sale  of  Securities  by  Nonresident — Gains  and  profits  of 
a nonresident  from  the  sale,  exchange  or  other  disposition  of 
stocks,  bonds,  etc.,  are  not  taxable,  and  should  not  be  in- 
cluded in  gross  income,  except  to  the  extent  to  which  the 
same  shall  be  a part  of  the  income  from  a business  carried 
on  in  New  York  State,  even  though  the  sale  or  other  dispo- 
sition may  have  been  made  within  the  State.  Likewise,  losses 
sustained  from  the  sale  or  other  disposition  of  stocks,  bonds, 
etc.,  under  like  conditions,  are  not  deductible,  except  to  the 
extent  that  they  may  be  losses  sustained  in  connection  with 
a business  carried  on  within  the  State. 

(f)  Losses  sustained  of  property  not  connected  with 
trade  or  business  if  arising  from  fires,  storms,  ship-wrecks, 
or  other  casualty,  or  from  theft,  and  not  compensated  for  by 
insurance  or  otherwise.  In  the  case  of  a nonresident  of  the 


20 


New  York  State  Personal  Income  Tax  Law 


State,  this  deduction  is  only  allowed  in  the  case  of  real 
property  or  tangible  personal  property  having  an  actual  situs 
within  the  State  of  New  York. 

(g)  Debts  ascertained  to  be  worthless  and  charged  off 
within  the  taxable  year. 

(h)  Depreciation — a reasonable  allowance  for  the  ex- 
haustion, wear  and  tear  of  property  used  in  the  trade  or 
business,  including  a reasonable  allowance  for  obsolescence. 

(i)  Depletion — In  the  case  of  mines,  oil  and  gas  wells, 
and  other  natural  deposits,  and  timber,  a reasonable  allow- 
ance for  depletion. 

(j)  Contributions  to  religious,  charitable  and  other 
benevolent  corporations  or  associations,  and  to  the  vocational 
rehabilitation  fund,  to  an  amount  not  in  excess  of  15%  of 
the  taxpayer’s  net  income  as  computed  without  the  benefit  of 
this  subdivision.  A partnership  as  such  is  not  allowed  the 
deduction  for  contributions.  (Sec.  360.) 

Deductions  Allowed  a Nonresident — In  the  case  of  a non- 
resident of  the  State,  the  deduction  shall  be  allowed  only  if  and  to 
the  extent  that  they  are  connected  with  income  arising  from 
sources  within  the  State,  and  provided  that  a complete  return  be 
made  of  his  gross  income  both  within  and  without  the  State.  The 
deduction  for  charitable  contributions  by  a nonresident  only  in- 
cludes those  made  to  corporations  or  association  organized  in  New 
York  State  or  to  the  vocational  rehabilitation  fund.  (Sec.  360.) 

Deductions  Allowed  Estates  and  Trusts — Distinction  is 
made  between  ( 1 ) expenses  which  are  charges  against  the  corpus 
of  an  estate  or  trust,  and  (2)  expenses  which  are  incident  to  the 
business  management  of  the  estate  or  trust.  Items  falling  under 
(1)  are  not  proper  deductions  in  computing  net  income,  whereas 
items  which  fall  under  (2)  are  proper  deductions  in  computing 
net  income. 

In  accordance  with  the  foregoing,  executor’s  commissions,  court 
costs  and  attorney’s  fees  in  connection  with  the  settlement  of  an 
estate  or  the  creation  of  a trust  which  are  directly  chargeable  to 


A Synopsis  of  the  Law  and  Regulations 


21 


the  corpus  of  the  estate  or  trust,  are  not  proper  deductions  in  de- 
termining net  income.  Likewise,  expenses  incurred  by  a fiduciary 
in  litigation  to  sustain  a will  are  not  proper  deductions  in  de- 
termining net  income.  On  the  other  hand,  if  trustees’  commis- 
sions are  deducted  from  the  income  of  the  estate  or  trust  distribut- 
able among  the  beneficiaries,  the  amount  of  such  commission 
should  be  entered  as  legitimate  and  necessary  expenses  properly 
deductible  by  the  fiduciary  for  income  tax  purposes. 

Expenses  necessary  to  carrying  on  the  business  of  the  trust  or 
estate  by  the  fiduciary  are  deductible  in  the  same  manner  as  sim- 
ilar expenses  of  an  individual ; likewise  interest,  taxes,  losses,  de- 
preciation and  depletion  are  subject  to  the  same  rules  relating  to 
these  deductible  items  as  apply  to  individuals. 

In  the  return  of  a fiduciary,  in  addition  to  the  deductions  pro- 
vided for  individuals,  there  shall  also  be  allowed  as  a deduction 
any  part  of  the  gross  income  which  pursuant  to  the  terms  of  the 
will  or  trust  deed  is  during  the  taxable  year  paid  to  or  permanently 
set  aside  for  the  United  States  or  any  political  subdivision  thereof, 
or  any  corporation  or  association  organized  for  religious,  char- 
itable, scientific,  or  educational  purposes,  or  for  the  prevention  of 
cruelty  to  children  or  animals,  no  part  of  the  net  earnings  of 
which  inures  to  the  benefit  of  any  private  stockholder  or 
individual. 

Items  Not  Deductible — In  computing  net  income  no  deduc- 
tion shall  be  allowed  in  respect  of — 

(a)  Personal,  living,  or  family  expenses. 

Insurance  Premiums — Insurance  paid  on  a dwelling  owned 
and  occupied  by  the  taxpayer,  is  a personal  expense,  and  not 
deductible.  Also,  premiums  paid  for  life  insurance  by  the 
insured  are  not  deductible. 

Commutation  Ticket — The  expense  of  traveling  to  and 
from  business  of  a person  employed  in  New  York  and  re- 
siding in  the  suburbs,  is  not  deductible. 


22 


New  York  State  Personal  Income  Tax  Law 


(b)  Expenditures  for  new  buildings  or  for  permanent 
improvements  made  to  increase  the  value  of  any  property 
or  estate. 

(c)  Expenditures  in  restoring  property  or  making  good 
the  exhaustion  thereof  for  which  an  allowance  is  or  has  been 
made. 

(d)  Premiums  paid  on  any  life  insurance  policies  cover- 
ing the  life  of  any  officer  or  any  employee  or  person  finan- 
cially interested  in  the  business  of  the  taxpayer,  when  the 
taxpayer  is  directly  or  indirectly  a beneficiary  under  such 
policy.  (Sec.  361.) 

Ascertainment  of  Gain  or  Loss — In  determining  the  gain 
or  loss  from  the  sale  or  other  disposition  of  property,  the  basis 
shall  be 

First — For  property  acquired  before  January  1,  1919, 
the  fair  market  price  or  value  of  such  property  as  of  January 
1,  1919. 

Second — For  property  acquired  on  or  after  January  1, 
1919,  the  cost  thereof,  or  the  inventory  value.  (Sec.  353.) 

Gift — The  Comptroller  has  ruled  that  a gift  constitutes 
a disposition  of  property  which  may  result  in  a profit  or  loss 
to  be  measured  by  the  cost  and  the  value  at  the  date  of  the 
gift.  This  profit  or  loss  is  to  be  reported  by  the  donor  and  not 
by  the  recipient  of  the  property. 

Market  Value — In  determining  market  value,  it  is  not  neces- 
sary that  an  actual  market  be  established.  In  the  absence  of  an 
actual  market,  market  value  may  be  regarded  as  the  price  which 
might  reasonably  be  agreed  upon  between  a willing  buyer  and  a 
willing  seller. 

Exchange  of  Property — When  property  is  exchanged  for 
other  property,  the  property  received,  for  the  purpose  of  determ- 
ining gain  or  loss,  shall  be  treated  as  the  equivalent  of  cash  to  the 
amount  of  its  fair  market  value.  But,  when  in  the  case  of  a reor- 
ganization, merger  or  consolidation  of  a corporation,  a taxpayer 


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23 


receives,  in  place  of  stock  or  securities  owned  by  him,  new  stock 
or  securities  of  no  greater  aggregate  par  or  face  value,  no  gain  or 
loss  shall  be  deemed  to  occur  from  the  exchange,  the  new  stock 
taking  the  place  of  that  exchanged.  (iSec.  354.) 

But  when  the  aggregate  par  value  of  the  new  stock  or  securi- 
ties received  as  above  is  in  excess  of  the  aggregate  par  value  of  the 
stock  or  securities  exchanged,  a like  amount  in  par  or  face  value 
of  the  new  stock  received  shall  be  treated  as  taking  the  place  of  the 
stock  exchanged,  and  the  amount  of  the  excess  in  par  value  shall 
be  treated  as  a gain  to  the  extent  that  the  fair  market  value  of  the 
new  stock  is  greater  than  the  cost  of  the  stock  exchanged,  if  ac- 
quired on  or  after  January  1st,  1919;  if  acquired  prior  to  January 
1st,  1919,  the  fair  market  price  or  value  as  of  that  date  of  the 
stock  exchanged.  (Sec.  355.) 

Dividends — For  the  purpose  of  the  statute,  dividends  com- 
prise any  distribution  in  the  ordinary  course  of  business  even 
though  extraordinary  in  amount,  made  by  a domestic  or  foreign 
corporation  to  its  shareholders  out  of  its  earnings  or  profits.  Divi- 
dends are  income  for  the  year  in  which  payable,  regardless  of 
when  the  earnings  or  profits  out  of  which  they  were  paid  were 
accumulated. 

Stock  Dividends — In  the  case  of  Macomber  vs.  Eisner, 
which  arose  under  the  Federal  Income  Tax  Law,  it  was  held 
that  stock  dividends  are  not  income.  This  decision  also  settles 
the  question  in  respect  to  their  taxability  under  the  New  York 
State  Law. 

In  the  case  of  nonresidents,  dividends  are  not  subject  to  tax 
and  need  not  be  reported  as  a part  of  gross  income,  unless  they 
are  a part  of  income  from  any  trade  or  business  carried  on  in  New 
York  State,  the  income  of  which  is  itself  subject  to  taxation  under 
the  Act. 

Inventories — Whenever  in  the  opinion  of  the  Comptroller 
the  use  of  inventories  is  necessary  for  the  determination  of  net 


24 


New  York  State  Personal  Income  Tax  Law 


income,  inventories  shall  be  taken  upon  such  basis  as  he  may  pre- 
scribe, conforming  as  nearly  as  possible  to  the  best  accounting 
practice  in  the  trade  or  business  and  most  clearly  reflecting  the 
income  of  the  taxpayer.  (Sec.  356.) 

Credit  for  Taxes — A nonresident  taxpayer  who  is  liable  to 
income  tax  to  the  State  where  he  resides,  upon  his  net  income  de- 
rived from  sources  in  New  York  State  and  subject  to  taxation  in 
this  State,  shall  be  allowed  to  credit  the  amount  of  income  tax 
payable  to  New  York  State  with  such  proportion  of  the  tax  pay- 
able where  he  resides  as  his  income  subject  to  the  New  York  In- 
come Tax  bears  to  his  entire  income  upon  which  the  tax  payable 
to  such  other  State  was  imposed.  This  credit  is  only  allowed  if 
the  laws  of  such  other  State  grant  a substantially  similar  credit 
to  residents  of  New  York  State  subject  to  income  tax  under  such 
laws.  (Sec.  363.)  <+ 

Basis  of  Computing  Net  Income — Taxpayers  are  required 
to  make  returns  upon  the  basis  of  their  annual  accounting  period, 
whether  a calendar  year  or  a fiscal  year.  A fiscal  year  means  an 
accounting  period  of  twelve  months  ending  on  the  last  day  of  any 
month  other  than  December.  (Sec.  350 — ‘Subdiv.  4.) 

A taxpayer  having  no  annual  accounting  period  shall  make  his 
return  on  the  basis  of  a calendar  year. 

It  is  recognized  that  no  uniform  method  of  accounting  can  be 
prescribed  for  all  taxpayers,  and  the  law  contemplates  that  each 
taxpayer  shall  adopt  such  forms  and  systems  of  accounting  as  are 
in  his  judgment  best  suited  to  his  purpose.  The  law  requires  each 
taxpayer  to  make  a return  of  his  true  income,  and  he  must  there- 
fore maintain  such  accounting  records  as  will  enable  him  to  do  so. 
If  a taxpayer  changes  his  accounting  period  from  fiscal  to  calendar 
year,  or  vice  versa , he  must  give  written  notice  thereof  and  his 
reasons  therefor  to  the  Comptroller.  If  the  change  is  approved 
by  the  Comptroller,  the  taxpayer  must  thereafter  make  his  returns 
upon  the  basis  of  the  new  accounting  period.  (Sec.  358.) 


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25 


Withholding  Agents — Include  all  individuals,  corporations, 
associations,  partnerships,  fiduciaries,  employers,  etc.,  having  the 
control,  receipt,  custody,  disposal  or  payment,  of  interest,  rents, 
salaries,  wages,  compensations  or  other  fixed  or  determinable 
gains,  profits  and  income  taxable  under  this  Act.  (Sec.  350.) 

Information  and  Payment  at  Source — Every  withholding 
agent  shall  deduct  and  withhold  the  tax  due  from  all  salaries, 
wages  and  compensation  of  whatever  kind,  earned  for  personal 
services  and  taxable  under  this  Act,  of  which  he  shall  have  con- 
trol, custody,  disposal  or  payment,  if  such  compensation  of  any  in- 
dividual equals  or  exceeds  $1,000,  unless  the  taxpayer  shall  file  a 
certificate  with  the  withholding  agent  showing  that  he  is  a resident 
of  New  York  State  and  setting  forth  his  residence  address  within 
the  State.  If  the  employee  files  a claim  for  personal  exemption 
greater  than  $1,000,  the  employer  shall  withhold  the  tax  only  on 
the  amount  in  excess  of  the  exemption  claim.  Every  withholding 
agent  shall  make  a RETURN  OF  INFORMATION  to  the 
Comptroller  in  the  case  of  every  taxpayer  under  this  act  where 
the  income  to  which  the  taxpayer  is  entitled  amounts  to  $1,000, 
or  more,  in  any  taxable  year. 

The  withholding  agent  is  required  to  deduct  and  withhold  any 
tax  due  hereunder  and  to  make  return  thereof  on  or  before  April 
15th  in  each  year,  and  at  the  same  time  pay  the  tax  to  the 
Comptroller. 

Income  upon  which  any  tax  is  required  to  be  withheld  shall  be 
included  in  the  return  made  by  the  recipient  of  such  income,  but 
the  amount  of  tax  withheld  shall  be  credited  against  the  amount 
of  tax  shown  to  be  due  on  the  return  of  the  taxpayer.  (Sec.  366.) 

Exemption  of  Certain  Personal  Property  from  Taxation — 

The  income  tax  is  in  addition  to  all  other  taxes  imposed  by  law, 
except  that  money  on  hand  or  on  deposit  with  or  without  interest, 
bonds,  notes  and  choses  in  action,  and  stock  (other  than  bank 
stock),  owned  by  an  individual  or  constituting  a part  of  a trust  or 
estate  subject  to  the  income  tax,  shall  not  after  July  31st,  1919,  be 


26 


New  York  State  Personal  Income  Tax  Law 


included  in  the  valuation  of  personal  property  on  the  assessment 
rolls  of  the  various  tax  districts  of  the  State.  (Sec.  352.) 

Time  and  Place  of  Filing  Returns — Returns  shall  be  made 
to  the  Comptroller  of  the  State  of  New  York,  on  or  before  April 
15th  of  each  year,  if  the  return  is  made  on  the  basis  of  a calendar 
year ; if  made  on  the  basis  of  a fiscal  year,  the  return  must  be  filed 
on  or  before  the  fifteenth  day  of  the  fourth  month  following 
the  close  of  the  taxpayer’s  fiscal  year.  Provision  is  made  for  an 
extension  of  time  for  filing  returns  upon  good  cause  shown.  The 
above  provisions  apply  to  both  resident  and  nonresident  taxpayers. 
(Sec.  371.) 

Returns  of  income  must  be  delivered  or  mailed  to  any  one  of 
the  district  officers  of  the  Income  Tax  Bureau,  preferably  to  the 
district  office  in  which  the  taxpayer  resides.  However,  partner- 
ship returns  and  information  returns,  which  are  not  accompanied 
by  the  payment  of  any  tax,  should  be  mailed  to  the  office  of  the 
New  York  State  Tax  Bureau,  at  Albany,  New  York. 

Payment  of  Tax — At  the  time  of  filing  his  return,  each  tax- 
payer shall  pay  to  the  State  Comptroller  the  amount  of  the  tax 
as  the  same  shall  appear  from  the  face  of  the  return.  (Sec.  377.) 

The  Comptroller  will  accept  uncertified  checks  in  payment  of  in- 
come taxes,  provided  such  checks  are  collectible  at  par,  that  is, 
for  their  full  amount  without  any  deduction  for  exchange  or  other 
charges. 

Penalties — A taxpayer  failing  to  make  any  return  within  the 
time  required,  or  who  makes  a false  or  fraudulent  return,  with 
intent  to  evade  the  tax  imposed,  shall  be  guilty  of  a misdemeanor, 
and  shall  be  liable  to  a fine  of  not  more  than  $1,000,  or  imprisoned 
for  one  year,  or  both. 

If  a person  who  has  failed  to  make  a return  without  intent  to 
evade  the  tax,  shall  voluntarily  make  a correct  return  within  60 
days  after  the  same  is  due,  there  shall  be  added  to  his  tax  5%  of 
the  amount  otherwise  due,  but  such  additional  amount  shall  in  no 
case  be  less  than  $2.00,  and  1%  for  each  month  or  fraction  of  a 
month  during  which  the  tax  remains  unpaid. 


A Synopsis  of  the  Law  and  Regulations 


27 


Upon  the  failure  to  file  any  return  or  pay  a tax  within  60  days 
after  the  due  date  thereof,  the  tax  is  doubled  with  the  addition  of 
1%  of  the  doubled  tax  for  each  month  or  fraction  thereof.  (Sec. 

376. ) 

The  law  also  provides  penalties  where  an  understatement  of  the 
tax  is  made  in  the  return,  the  amount  of  such  penalties  depending 
upon  whether  or  not  the  understatement  is  unintentional  or  is  done 
with  fraudulent  intent.  Provision  is  also  made  for  a refund  by  the 
Comptroller  to  any  taxpayer  who  has  made  an  overpayment.  ( Sec. 

377. ) 

Waiver  of  Penalties  and  Interest  by  Comptroller — The  law 

now  gives  the  Comptroller  the  power  to  waive  or  reduce  or  com- 
promise any  of  the  penalties  or  interest  imposed  on  delinquent  tax- 
payers, upon  the  Comptroller  making  a record  of  his  reasons 
therefor.  (Sec.  379.) 

Extension  of  Time  for  Filing  Returns — If  the  time  for  filing 
a return  is  extended  by  the  Comptroller,  the  taxpayer  is  required 
to  pay  interest  on  the  amount  of  the  tax  at  the  rate  of  6%  per 
annum  from  the  time  such  tax  was  originally  due  to  the  time  of 
payment.  The  above  also  applies  to  a withholding  agent , but  such 
interest  cannot  be  charged  by  him  to  the  taxpayer. 

Location  of  District  Offices  of  Income  Tax  Bureau — 
District  No.  1 — 42  No.  Pearl  St.,  Albany,  New  York. 

“ “ 2—120  Broadway,  New  York,  N.  Y. 

3 — 319  Washington  St.,  Brooklyn,  New  York. 

“ “ 4 — St.  Ann’s  Ave.  & 161st  St.,  Bronx,  N.  Y. 

5 —  2 No.  Washington  St.,  Jamaica,  New  York. 

6 —  Court  House,  White  Plains,  New  York. 

“ “ 7-11-13  W.  Swan  St.,  Buffalo,  N.  Y. 

“ “ 8-106-108  Main  St.,  E.,  Rochester,  N.  Y. 

“ “ 9—4 23j/2  Salina  St.,  Syracuse,  N.  Y. 

“ “ 10 — 110  Genesee  St.,  Utica,  N.  Y. 

“ ‘ 11—230  Lake  St.,  Elmira,  N.  Y. 

“ 12 — Court  and  State  Sts.,  Binghamton,  N.  Y. 

“ “ 13—518  Broadway,  Kingston,  N.  Y. 


28 


New  York  State  Personal  Income  Tax  Law 


NEW  YORK  STATE  PERSONAL  INCOME  TAX  LAW. 

In  effect  May  14,  1919. 

An  Act  to  Amend  the  Tax  Law,  in  Relation  to  Imposing  Taxes  upon 
and  with  Respect  to  Incomes. 

Chapter  627,  Laws  of  1919,  and  Amendments  thereto 

Section  1. — Chapter  sixty-two  of  the  laws  of  nineteen  hundred 
and  nine,  entitled  “An  act  in  relation  to  taxation,  constituting  chapter 
sixty  of  the  consolidated  laws,”  is  hereby  amended  by  adding  a new 
article  to  be  article  sixteen,  to  read  as  follows: 

Article  16. 

Taxes  Upon  and  with  Respect  to  Personal  Incomes. 

Chapter  62 7,  Laws  of  1919,  and  Amendments  thereto, 

Section  350.  Definitions. 

351.  Imposition  of  income  tax. 

351-a.  Reimposition  of  tax  against  nonresidents. 

351-b.  Tax  a debt. 

352.  Exemption  of  certain  personal  property. 

353.  Ascertainment  of  gain  and  loss. 

354.  Exchange  of  property. 

355.  Gain  through  exchange. 

356.  Inventory. 

357.  Net  income  defined. 

358.  Computation  of  net  income. 

359.  Gross  income  defined. 

360.  Deductions. 

361.  Items  not  deductible. 

362.  Exemptions. 

363.  Credit  for  taxes  in  case  of  taxpayers  other  than  resi- 

dents of  the  state. 

364.  Partnerships. 

365.  Estates  and  trusts. 

366.  Information  and  payment  at  source. 

367.  Taxpayers’  returns. 

368.  Partnership  returns. 

369.  Fiduciary  returns. 

370.  Returns  when  accounting  period  changed. 

371.  Time  and  place  of  filing  returns. 

372.  Administration  of  income  tax  law. 

373.  Powers  of  comptroller. 

373-a.  Oaths  and  acknowledgments. 

374.  Revision  and  readjustment  of  accounts  by  comptroller. 

375.  Review  of  determination  of  comptroller  by  certiorari 

and  regulation  as  to  writ. 

376.  Penalties,  additional  taxes  and  interest. 

377.  When  payable. 

378.  [Notice  of  assessment.  Repealed.] 

379.  Collections  of  taxes;  penalties  and  interest. 


New  York  State  Personal  Income  Tax  Law 


29 


380.  Warrant  for  the  collection  of  taxes. 

381.  Action  of  recovery  of  taxes. 

382.  Distribution  of  the  income  tax. 

383.  Comptroller  to  make  regulations  and  collect  facts. 

384.  Secrecy  required  of  officials;  penalty  for  violation. 

385.  Contract  to  assume  income  tax  illegal. 

Section  350.  Definitions. — For  the  purpose  of  this  article  and 
unless  otherwise  required  by  the  context: 

1.  The  word  “comptroller”  means  the  state  comptroller. 

2.  The  word  “taxpayer”  includes  any  person,  trust  or  estate  sub- 
ject to  a tax  imposed  by  this  article,  or  whose  income  is  in  whole  or  in 
part  subject  to  a tax  imposed  by  this  article,  and  does  not  include 
corporations. 

3.  The  words  “military  or  naval  forces  of  the  United  States”  in- 
clude the  marine  corps,  the  coast  guard,  the  army  nurse  corps,  female, 
and  the  navy  nurse  corps,  female,  but  this  shall  not  be  deemed  to 
exclude  other  units  otherwise  included  within  such  words. 

4.  The  words  “taxable  year”  mean  the  calendar  year,  or  the  fiscal 
year  ending  during  such  calendar  year,  upon  the  basis  of  which  the 
net  income  is  computed  under  this  article.  The  words  “fiscal  year” 
mean  an  accounting  period  of  twelve  months,  ending  on  the  last  day 
of  any  month  other  than  December. 

5.  The  word  “fiduciary”  means  a guardian,  trustee,  executor, 
administrator,  receiver,  conservator,  or  any  person,  whether  individual 
or  corporate,  acting  in  any  fiduciary  capacity  for  any  person,  trust 
or  estate. 

6.  The  word  “paid”  for  the  purposes  of  the  deductions  and  credits 
under  this  article,  means  “paid  or  accrued”  or  “paid  or  incurred,”  and 
the  terms  “paid  or  incurred”  and  “paid  or  accrued”  shall  be  construed 
according  to  the  method  of  accounting  upon  the  basis  of  which  the 
net  income  is  computed,  under  this  article.  The  term  “received”  for 
the  purpose  of  the  computation  of  net  income  under  this  article,  means 
“received  or  accrued”  and  the  term  “received  or  accrued”  shall  be 
construed  according  to  the  method  of  accounting  upon  the  basis  of 
which  the  net  income  is  computed  under  this  article. 

7.  The  word  “resident”  applies  only  to  natural  persons  and  in- 
cludes for  the  purpose  of  determining  liability  to  the  tax  imposed  by 
this  article  upon  or  with  reference  to  the  income  of  any  taxable  year, 
commencing  with  the  year  nineteen  hundred  and  nineteen,  any  person 
who  shall,  at  any  time  during  the  last  six  months  of  the  calendar  year, 
be  a resident  of  the  state. 

8.  The  word  “dividend”  means  any  distribution  made  by  a cor- 
poration out  of  its  earnings  or  profits  to  its  shareholders  or  mem- 
bers, whether  in  cash  or  in  other  property  or  in  stock  of  the  cor- 
poration. 


30 


New  York  State  Personal  Income  Tax  Law 


9.  The  words  “foreign  country”  or  “foreign  government”  mean 
any  jurisdiction  other  than  one  embraced  within  the  United  States. 
The  words  “United  States”  include  the  states,  the  territories  of  Alaska 
and  Hawaii  and  the  District  of  Columbia. 

10.  The  words  “withholding  agent”  include  all  individuals,  cor- 
porations, association  and  partnerships,  in  whatever  capacity  acting, 
including  lessees,  or  mortgagors  of  real  or  personal  property,  fidu- 
ciaries, employers,  and  all  officers  and  employees  of  the  state,  or  of 
any  municipal  corporation  or  political  subdivision  of  the  state,  having 
the  control,  receipt,  custody,  disposal  or  payment,  of  interest,  rent, 
salaries,  wages,  premiums,  annuities,  compensations,  remunerations, 
emoluments  or  other  fixed  or  determinable  annual  or  periodical  gains, 
profits  and  income  taxable  under  this  article. 

Sec.  351.  Imposition  of  Income  Tax. — A tax  is  hereby  imposed 
upon  every  resident  of  the  state,  which  tax  shall  be  levied,  collected 
and  paid  annually  upon  and  with  respect  to  his  entire  net  income  as 
herein  defined  at  rates  as  follows:  One  per  centum  of  the  amount 
of  net  income  not  exceeding  ten  thousand  dollars;  two  per  centum  of 
the  amount  of  net  income  in  excess  of  ten  thousand  dollars  but  not 
in  excess  of  fifty  thousand  dollars;  three  per  centum  of  the  amount 
of  net  income  in  excess  of  fifty  thousand  dollars.  A like  tax  is  hereby 
imposed  and  shall  be  levied,  collected  and  paid  annually,  at  the  rates 
specified  in  this  section,  upon  and  with  respect  to  the  entire  net 
income  as  herein  defined,  except  as  hereinafter  provided,  from  all 
property  owned  and  from  every  business,  trade,  profession  or  occu- 
pation carried  on  in  this  state  by  natural  persons  not  residents  of  the 
state.  Such  tax  shall  first  be  levied,  collected  and  paid  in  the  year 
nineteen  hundred  and  twenty  upon  and  with  respect  to  the  taxable 
income  for  the  calendar  year  nineteen  hundred  and  nineteen,  or  for 
any  taxable  year  ending  during  the  year  nineteen  hundred  and 
nineteen. 

Sec.  351-a.  Reimposition  of  tax  against  nonresidents. — The  tax 

provided  for  in  section  three  hundred  and  fifty-one  of  this  chapter, 
upon  and  with  respect  to  income  derived  from  all  property  owned 
and  from  every  business,  trade,  profession  or  occupation  carried  on 
in  this  state  by  natural  persons  not  residents  of  this  state,  is  hereby 
reimposed  with  respect  to  the  taxable  income  for  the  calendar  year 
nineteen  hundred  and  nineteen  and  for  any  taxable  year  ending  during 
the  year  nineteen  hundred  and  nineteen,  and  for  each  year  thereafter. 
Such  tax  shall  be  levied,  collected  and  paid  for  the  year  nineteen 
hundred  and  nineteen,  and  returns  with  respect  thereto  shall  be  filed 
on  or  before  June  thirtieth,  nineteen  hundred  and  twenty,  unless  the 
time  shall  be  extended  as  provided  in  this  article. 

Sec.  351-b.  Tax  a Debt. — Every  tax  imposed  by  this  article,  and 
all  increases,  interest  and  penalties  thereon,  in  addition  to  being 
a tax  against  property,  business,  trade,  profession  or  occupation,  as 
in  this  article  provided,  shall  also  become,  from  the  time  it  is  due 
and  payable,  a personal  debt,  from  the  person  or  persons  liable  to  pay 
the  same,  to  the  state  of  New  York. 


New  York  State  Personal  Income  Tax  Law 


31 


Sec.  352.  Exemption  of  Certain  Personal  Property  from  Taxa- 
tion.— -The  taxes  imposed  by  this  article  are  in  addition  to  all  other 
taxes  imposed  by  law,  except  that  money  on  hand  or  on  deposit  with 
or  without  interest,  bonds,  notes  and  choses  in  action  and  shares  of 
stock  in  corporation  other  than  banks  and  banking  associations, 
owned  by  any  individual  or  constituting  a part  of  a trust  or  estate 
subject  to  the  income  tax  imposed  by  this  article,  shall  not  after 
July  thirty-first,  nineteen  hundred  and  nineteen,  be  included  in  the 
valuation  of  the  personal  property  included  in  the  assessment-rolls 
of  the  several  tax  districts,  villages,  school  districts  and  special  tax 
districts  of  the  state. 

Sec.  353.  Ascertainment  of  Gain  and  Loss. — For  the  purpose  of 
ascertaining  the  gain  derived  or  loss  sustained  from  the  sale  or  other 
disposition  of  property,  real,  personal  or  mixed,  the  basis  shall  be 
first,  in  case  of  property  acquired  before  January  first,  nineteen  hun- 
dred and  nineteen,  the  fair  market  price  or  value  of  such  property, 
as  of  January  first,  nineteen  hundred  and  nineteen,  and,  second,  in 
case  of  property  acquired  on  or  after  that  date,  the  cost  thereof;  or 
the  inventory  value,  if  the  inventory  is  made  in  accordance  with  this 
article. 

Sec.  354.  Exchange  of  Property. — When  property  is  exchanged 
for  other  property,  the  property  received  in  exchange  shall  for  the 
purpose  of  determining  gain  or  loss  be  treated  as  the  equivalent  of 
cash  to  the  amount  of  its  fair  market  value,  if  any;  but  when  in  con- 
nection with  the  reorganization,  merger  or  consolidation  of  a cor- 
poration a taxpayer  receives,  in  place  of  stock  or  securities  owned 
by  him,  new  stock  or  securities  of  no  greater  aggregate  par  or  face 
value,  no  gain  or  loss  shall  be  deemed  to  occur  from  the  exchange, 
and  the  new  stock  or  securities  received  shall  be  treated  as  taking 
the  place  of  the  stock,  securities  or  property  exchanged. 

Sec.  355.  Gain  through  Exchange. — When  in  the  case  of  any 
such  reorganization,  merger  or  consolidation  the  aggregate  par  or 
face  value  of  the  new  stock  or  securities  received  is  in  excess  of  the 
aggregate  par  or  face  value  of  the  stock  or  securities  exchanged,  a 
like  amount  in  par  or  face  value  of  the  new  stock  or  securities  re- 
ceived shall  be  treated  as  taking  the  place  of  the  stock  or  securities 
exchanged,  and  the  amount  of  the  excess  in  par  or  face  value  shall 
be  treated  as  a gain  to  the  extent  that  the  fair  market  value  of  the 
new  stock  or  securities  is  greater  than  the  cost  of  the  stock  or 
securities  exchanged,  if  acquired  on  or  after  January  first,  nineteen 
hundred  and  nineteen,  and  its  fair  market  price  or  value  as  of  January 
first,  nineteen  hundred  and  nineteen,  if  acquired  before  that  date. 

Sec.  356.  Inventory. — Whenever  in  the  opinion  of  the  comp- 
troller the  use  of  inventories  is  necessary  in  order  clearly  to  deter- 
mine the  income  of  any  taxpayer,  inventories  shall  be  taken  by  such 
taxpayer  upon  such  basis  as  the  comptroller  may  prescribe,  conform- 
ing as  nearly  as  may  be  to  the  best  accounting  practice  in  the  trade 
or  business  and  most  clearly  reflecting  the  income,  and  conforming 


32 


New  York  State  Personal  Income  Tax  Law 


so  far  as  may  be  to  the  forms  and  methods  prescribed  by  the  United 
States  commissioner  of  internal  revenue  under  the  act  of  congress 
known  as  the  revenue  act  of  nineteen  hundred  and  eighteen. 

Sec.  357.  Net  Income  Defined. — The  term  “net  income”  means 
the  gross  income  of  a taxpayer  less  the  deductions  allowed  by  this 
article. 

Sec.  358.  Computation  of  Net  Income. — 1.  The  net  income  shall 
be  computed  upon  the  basis  of  the  taxpayer’s  annual  accounting 
period  (fiscal  year  or  calendar  year  as  the  case  may  be)  in  accordance 
with  the  method  of  accounting  regularly  employed  in  keeping  the 
books  of  such  taxpayer;  but  if  no  such  method  of  accounting  has 
been  so  employed,  or  if  the  method  employed  does  not  clearly  reflect 
the  income,  the  computation  shall  be  made  upon  such  basis  and  in 
such  manner  as  in  the  opinion  of  the  comptroller  does  clearly  reflect 
the  income.  If  the  taxpayer’s  annual  accounting  period  is  other  than 
a fiscal  year  as  defined  in  this  article,  or  if  the  taxpayer  has  no  annual 
accounting  period  or  does  not  keep  books,  the  net  income  shall  be 
computed  on  the  basis  of  the  calendar  year. 

2.  If  a taxpayer  changes  his  accounting  period  from  fiscal  year 
to  calendar  year,  from  calendar  year  to  fiscal  year,  or  from  one  fiscal 
year  to  another,  the  net  income  shall,  with  the  approval  of  the  comp- 
troller, be  computed  on  the  basis  of  such  new  accounting  period,  sub- 
ject to  the  provisions  of  section  three  hundred  and  seventy. 

Sec.  359.  Gross  Income  Defined. — The  term  “gross  income”: 

1.  Includes  gains,  profits  and  income  derived  from  salaries,  wages 
or  compensation  for  personal  service,  of  whatever  kind  and  in  what- 
ever form  paid,  or  from  professions,  vocations,  trades,  businesses, 
commerce,  or  sales,  or  dealings  in  property,  whether  real  or  personal, 
growing  out  of  the  ownership  or  use  of  or  interest  in  such  property; 
also  from  interest,  rent,  dividends,  securities,  or  the  transaction  of 
any  business  carried  on  for  gain  or  profit,  or  gains  or  profits  and 
income  derived  from  any  source  whatever,  including  gains  or  profits 
or  income  derived  through  estates  or  trusts  by  the  beneficiaries 
thereof,  whether  as  distributed  or  as  distributable  shares.  The  amount 
of  all  such  items  shall  be  included  in  the  gross  income  for  the  taxable 
year  in  which  received  by  the  taxpayer,  unless,  under  the  methods 
of  accounting  permitted  in  this  article,  any  such  amounts  are  to  be 
properly  accounted  for  as  of  a different  period;  but 

2.  Does  not  include  the  following  items  which  shall  be  exempt 
from  taxation  under  this  article: 

a.  The  proceeds  of  life  insurance  policies  and  contracts  paid 
upon  the  death  of  the  insured  to  individual  beneficiaries  or  to  the 
estate  of  the  insured. 

b.  The  amount  received  by  the  insured  as  a return  of  premium 
or  premiums  paid  by  him  under  life  insurance,  endowment  or  annuity 
contracts,  either  during  the  term  or  at  the  maturity  of  the  term  men- 
tioned in  the  contract  or  upon  surrender  of  the  contract. 


New  York  State  Personal  Income  Tax  Law 


33 


c.  The  value  of  property  acquired  by  gift,  bequest,  devise  or 
descent  (but  the  income  from  such  property  shall  be  included  in 
gross  income). 

d.  Interest  upon  the  obligations  of  the  United  States  or  its 
possessions;  or  securities  issued  under  the  provisions  of  the  federal 
farm  loan  act  of  July  seventeen,  nineteen  hundred  and  sixteen;  or 
bonds  issued  by  the  war  finance  corporation;  or  the  obligations  of 
the  State  of  New  York  or  of  any  municipal  corporation  or  political 
subdivision  thereof;  or  investments  upon  which  the  tax  provided  for 
in  section  three  hundred  and  thirty-one  of  this  chapter  has  here- 
tofore been  paid  since  June  first,  nineteeen  hundred  and  seventeen, 
during  the  period  of  years  for  which  such  tax  shall  have  been  paid. 

e.  Any  amount  received  through  accident  or  health  insurance  or 
under  workmen’s  compensation  acts,  as  compensation  for  personal 
injuries  or  sickness,  plus  the  amount  of  any  damages  received  whether 
by  suit  or  agreement  on  account  of  such  injuries  or  sickness,  or 
through  the  war  risk  insurance  act  or  any  law  for  the  benefit  or  relief 
of  injured  or  disabled  members  of  the  military  or  naval  forces  of  the 
United  States. 

f.  Salaries,  wages  and  other  compensation  received  from  the 
United  States  of  officials  or  employees  thereof,  including  persons  in 
the  military  or  naval  forces  of  the  United  States. 

g.  Income  received  by  any  officer  of  a religious  denomination  or 
by  any  institution,  or  trust,  for  moral  or  mental  improvement,  reli- 
gious, bible,  tract,  charitable,  benevolent,  fraternal,  missionary,  hos- 
pital, infirmary,  educational,  scientific,  literary,  library,  patriotic,  his- 
torical or  cemetery  purposes,  or  for  the  enforcement  of  laws  relating 
to  children  or  animals,  or  for  two  or  more  of  such  purposes,  if  such 
income  be  used  exclusively  for  carrying  out  one  or  more  of  such 
purposes;  but  nothing  herein  shall  be  construed  to  exempt  the  fees, 
stipends,  personal  earnings  or  other  private  income  of  such  officer 
or  trustee. 

3.  In  the  case  of  taxpayers  other  than  residents,  gross  income 
includes  only  the  gross  income  from  sources  within  the  state,  but 
shall  not  include  annuities,  interest  on  bank  deposits,  interest  on 
bonds,  notes  or  other  interest-bearing  obligations  or  dividends  from 
corporations,  except  to  the  extent  to  which  the  same  shall  be  a part 
of  income  from  any  business,  trade,  profession  or  occupation  carried 
on  in  this  state  subject  to  taxation  under  this  article. 

Sec.  360.  Deductions. — In  computing  net  income  there  shall  be 
allowed  as  deductions: 

1.  All  the  ordinary  and  necessary  expenses  paid  or  incurred 
during  the  taxable  year  in  carrying  on  any  trade  or  business,  including 
a reasonable  allowance  for  salaries  or  other  compensation  for  personal 
services  actually  rendered,  and  including  rentals  or  other  payments 
required  to  be  made  as  a condition  to  the  continued  use  or  possession, 
for  purposes  of  the  trade  or  business,  of  property  to  which  the  tax- 
payer has  not  taken  or  is  not  taking  title  or  in  which  he  has  no  equity. 


34 


New  York  State  Personal  Income  Tax  Law 


3.  Taxes  other  than  income  taxes  paid  or  accrued  within  the 
taxable  year  imposed,  first,  by  the  authority  of  the  United  States,  or 
of  any  of  its  possessions,  or,  second,  by  the  authority  of  any  state, 
or  territory,  or  any  county,  school  district,  municipality,  or  other 
taxing  subdivision  of  any  state  or  territory,  not  including  those 
assessed  against  local  benefits  of  a kind  tending  to  increase  the  value 
of  the  property  assessed,  or,  third,  by  the  authority  of  any  foreign 
government. 

4.  Losses  sustained  during  the  taxable  year  and  not  compensated 
for  by  insurance  or  otherwise,  if  incurred  in  trade  or  business. 

5.  Losses  sustained  during  the  taxable  year  and  not  compensated 
for  by  insurance  or  otherwise,  if  incurred  in  any  transaction  entered 
into  for  profit,  though  not  connected  with  the  trade  or  business;  but 
in  the  case  of  a taxpayer  other  than  a resident  of  the  state,  only  as 
to  such  transactions  in  real  property  or  in  tangible  personal  property 
having  an  actual  situs  within  the  state. 

6.  Losses  sustained  during  the  taxable  year  of  property  not  con- 
nected with  the  trade  or  business  (but,  in  the  case  of  a taxpayer  other 
than  a resident,  only  of  real  property  or  tangible  personal  property 
having  an  actual  situs  within  the  state)  if  arising  from  fires,  storms, 
shipwrecks,  or  other  casualty  or  from  theft,  and  not  compensated  for 
by  insurance  or  otherwise. 

7.  Debts  ascertained  to  be  worthless  and  charged  off  within  the 
taxable  year. 

8.  A reasonable  allowance  for  the  exhaustion,  wear  and  tear  of 
property  used  in  the  trade  or  business,  including  a reasonable  allow- 
ance for  obsolescence. 

9.  In  the  case  of  mines,  oil  and  gas  wells,  other  natural  deposit 
and  timber,  a reasonable  allowance  for  depletion  and  for  depreciation 
of  improvements,  according  to  the  peculiar  conditions  in  each  case, 
based  upon  cost  including  cost  of  development  not  otherwise  de- 
ducted; provided,  that  in  case  of  such  properties  acquired  prior  to 
January  first,  nineteen  hundred  and  nineteen,  the  fair  market  value 
of  the  property  (or  the  taxpayer’s  interest  therein)  on  that  date  shall 
be  taken  in  lieu  of  cost  up  to  that  date;  provided,  further,  that  in  the 
case  of  mines,  oil  and  gas  wells,  discovered  by  the  taxpayer  on  or 
after  January  first,  nineteen  hundred  and  nineteen,  and  not  acquired 
as  the  result  of  a purchase  of  a proven  tract  or  lease,  where  the  fair 
market  value  of  the  property  is  materially  disproportionate  to  the 
cost,  the  depletion  allowance  shall  be  based  upon  the  fair  market 
value  of  the  property  at  the  date  of  the  discovery  or  within  thirty 
days  thereafter;  such  reasonable  allowance  in  all  the  above  cases  to 
be  made  under  rules  and  regulations  to  be  prescribed  by  the  comp- 
troller. In  the  case  of  leases  the  deductions  allowed  by  this  para- 
graph shall  be  equitably  apportioned  between  the  lessor  and  lessee. 


New  York  State  Personal  Income  Tax  Law 


35 


10.  Contributions  or  gifts  made  within  the  taxable  year  to  cor- 
porations or  associations  operated  exclusively  for  religious,  charitable, 
scientific  or  educational  purposes,  or  for  the  prevention  of  cruelty 
to  children  or  animals,  no  part  of  the  net  earnings  of  which  inures  to 
the  benefit  of  any  private  stockholder  or  individual,  or  to  the  special 
fund  for  vocation  rehabilitation  authorized  by  section  seven  of  the 
act  of  congress  known  as  the  vocational  rehabilitation  act,  to  an 
amount  not  in  excess  of  fifteen  per  centum  of  the  taxpayer’s  net 
income  as  computed  without  the  benefit  of  this  subdivision.  Such 
contributions  or  gifts  shall  be  allowable  as  deductions  only  if  verified 
under  rules  and  regulations  prescribed  by  the  comptroller.  In  the 
case  of  a taxpayer  other  than  a resident  of  the  state  this  deduction 
shall  be  allowed  only  as  to  contributions  or  gifts  made  to  corpora- 
tions or  associations  incorporated  by  or  organized  under  the  laws  of 
this  state  or  to  the  vocational  rehabilitation  fund  above  mentioned. 

11.  In  the  case  of  a taxpayer  other  than  a resident  of  the  state 
the  deductions  allowed  in  this  section  shall  be  allowed  only  if,  and  to 
the  extent  that,  they  are  connected  with  income  arising  from  sources 
within  the  state;  and  the  proper  apportionment  and  allocation  of  the 
deductions  with  respect  to  sources  of  income  within  and  without  the 
state  shall  be  determined  under  rules  and  regulations  to  be  prescribed 
by  the  comptroller. 

Sec.  361.  Items  Not  Deductible. — In  computing  net  income  no 
deduction  shall  in  any  case  be  allowed  in  respect  of: 

1.  Personal,  living,  or  family  expenses. 

2.  Any  amount  paid  out  for  new  buildings  or  for  permanent  im- 
provements or  betterments  made  to  increase  the  value  of  any  property 
or  estate; 

3.  Any  amount  expended  in  restoring  property  or  in  making- 
good  the  exhaustion  thereof  for  which  an  allowance  is  or  has  been 
made;  or 

4.  Premiums  paid  on  any  life  insurance  policy,  covering  the  life 
of  any  officer  or  employee,  or  of  any  person  financially  interested  in 
any  trade  or  business  carried  on  by  the  taxpayer,  when  the  taxpayer 
is  directly  or  indirectly  a beneficiary  under  such  policy. 

Sec.  362.  Exemptions. — The  following  exemptions  shall  be 
allowed  to  any  taxpayer: 

1.  In  the  case  of  a single  person,  a personal  exemption  of  one 
thousand  dollars,  or  in  the  case  of  the  head  of  a family  or  a married 
person  living  with  husband  or  wife,  a personal  exemption  of  two 
thousand  dollars.  A husband  and  wife  living  together  shall  receive 
but  one  personal  exemption  of  two  thousand  dollars  against  their 
aggregate  net  income;  and  in  case  they  make  separate  returns,  the 
personal  exemption  of  two  thousand  dollars  shall  be  equally  divided 
between  them. 


36 


New  York  State  Personal  Income  Tax  Law 


2.  Two  hundred  dollars  for  each  person  (other  than  husband  or 
wife)  dependent  upon  and  receiving  his  chief  support  from  the  tax- 
payer, if  such  dependent  person  is  under  eighteen  years  of  age  or 
is  incapable  of  self-support  because  mentally  or  physically  defective. 

Sec.  363.  Credit  for  taxes  in  case  of  taxpayers  other  than  resi- 
dents of  the  state. — Whenever  a taxpayer  other  than  a resident  of  the 
state  has  become  liable  to  income  tax  to  the  state  or  country  where 
he  resides  upon  his  net  income  for  the  taxable  year,  derived  from 
sources  within  this  state  and  subject  to  taxation  under  this  article, 
the  comptroller  shall  credit  the  amount  of  income  tax  payable  by  him 
under  this  article  with  such  proportion  of  the  tax  so  payable  by  him 
to  the  state  or  country  where  he  resides  as  his  income  subject  to 
taxation  under  this  article  bears  to  his  entire  income  upon  which  the 
tax  so  payable  to  such  other  state  or  country  was  imposed;  provided 
that  such  credit  shall  be  allowed  only  if  the  laws  of  said  state  or 
country  (1)  grant  a substantially  similar  credit  to  residents  of  this 
state  subject  to  income  tax  under  such  laws  or  (2)  impose  a tax  upon 
the  personal  incomes  of  its  residents  derived  from  sources  in  this 
state  and  exempt  from  taxation  the  personal  incomes  of  residents  of 
this  state.  No  credit  shall  be  allowed  against  the  amount  of  the  tax 
on  any  income  taxable  under  this  article  which  is  exempt  from  taxa- 
tion under  the  laws  of  such  other  state  or  country.  This  section  as 
amended  shall  apply  to  taxes  for  the  year  nineteen  hundred  and  nine- 
teen and  each  year  thereafter. 

Sec.  364.  Partnerships. — Individuals  carrying  on  business  in 
partnerships  shall  be  liable  for  income  tax  only  in  their  individual 
capacity.  There  shall  be  included  in  computing  the  net  income  of 
each  partner  his  distributive  share,  whether  distributed  or  not,  of  the 
net  income  of  the  partnership  for  the  taxable  year,  or,  if  his  net 
income  for  such  taxable  year  is  computed  upon  the  basis  of  a period 
different  from  that  upon  the  basis  of  which  the  net  income  of  the 
partnership  is  computed,  then  his  distributive  share  of  the  net  income  of 
the  partnership  for  any  accounting  period  of  the  partnership  ending 
within  the  fiscal  or  calendar  year  upon  the  basis  of  which  the  partner’s 
net  income  is  computed.  Taxpayers  who  are  members  of  partnerships 
may  be  required  by  the  comptroller  to  make  a return  stating  the 
gross  receipts  and  net  gains  or  profits  of  the  partnership  for  any 
taxable  year.  The  net  income  of  the  partnership  shall  be  computed 
in  the  same  manner  and  on  the  same  basis  as  provided  in  computing 
the  net  income  of  individuals  except  that  the  deduction  provided  in 
subdivision  ten  of  section  three  hundred  and  sixty  shall  not  be  allowed 
and  the  personal  exemptions  provided  for  in  section  three  hundred  and 
sixty-two  shall  be  allowed  only  to  the  individual  partners. 

Sec.  365.  Estates  and  trusts. — 1.  The  tax  imposed  by  this  article 
shall  apply  to  estates  and  trusts,  which  tax  shall  be  levied,  collected 
and  paid  annually  upon  and  with  respect  to  the  income  of  estates  or 
of  any  kind  of  property  held  in  trust,  including: 

a.  Income  received  by  estates  of  deceased  persons  during  the 
period  of  administration  or  settlement  of  the  estate; 


New  York  State  Personal  Income  Tax  Law 


37 


b.  Income  accumulated  in  trust  for  the  benefit  of  unborn  or  un- 
ascertained person  or  persons  with  contingent  interests; 

c.  Income  held  for  future  distribution  under  the  terms  of  the 
will  or  trust; 

d.  Income  which  is  to  be  distributed  to  the  beneficiaries  period- 
ically, whether  or  not  at  regular  intervals,  and  the  income  collected 
by  a guardian  of  an  infant  to  be  held  or  distributed  as  the  court  may 
direct;  and 

e.  Income  of  an  estate  during  the  period  of  administration  or 
settlement  permitted  by  subdivision  three  to  be  deducted  from  the 
net  income  upon  which  the  tax  is  to  be  paid  by  the  fiduciary. 

2.  The  fiduciary  shall  be  responsible  for  making  the  return  of 
income  for  the  estate  or  trust  for  which  he  acts,  whether  such  income 
be  taxable  to  the  estate  or  trust  or  to  the  beneficiaries  thereof.  The 
net  income  of  an  estate  or  trust  shall  be  computed  in  the  same  manner 
and  on  the  same  basis  as  provided  in  this  article  for  individual  tax- 
payers, except  that  there  shall  also  be  allowed  as  a deduction  any 
part  of  the  gross  income  which  pursuant  to  the  terms  of  the  will  or 
deed  creating  the  trust,  is  during  the  taxable  year  paid  to  or  perma- 
nently set  aside  for  the  United  States,  any  state,  territory,  or  any 
political  subdivision  thereof,  or  the  District  of  Columbia,  or  any  cor- 
poration or  association  organized  and  operated  exclusively  for  reli- 
gious, charitable,  scientific  or  educational  purposes,  or  for  the  pre- 
vention of  cruelty  to  children  or  animals,  no  part  of  the  net  earnings 
of  which  inures  to  the  benefit  of  any  private  stockholder  or  indi- 
vidual; and  in  cases  under  paragraphs  d and  e of  subdivision  one  of 
this  section,  the  fiduciary  shall  include  in  the  return  a statement  of 
each  beneficiary’s  distributive  share  of  such  net  income,  whether  or 
not  distributed  before  the  close  of  the  taxable  year  for  which  the 
return  is  made. 

3.  In  cases  under  paragraphs  a,  b and  c of  subdivision  one,  of  this 
section,  the  tax  shall  be  imposed  upon  the  estate  or  trust  with  respect 
to  the  net  income  of  the  estate  or  trust  and  shall  be  paid  by  the 
fiduciary,  except  that  in  determining  the  net  income  of  the  estate  of 
any  deceased  person  during  the  period  of  administration  or  settlement 
there  may  be  deducted  the  amount  of  any  income  properly  paid  or 
credited  to  any  legatee,  heir  or  other  beneficiary.  In  such  cases,  the 
estate  or  trust  shall  be  allowed  the  same  exemptions  as  are  allowed 
to  single  persons  under  section  three  hundred  and  sixty-two,  and  in 
such  cases  an  estate  or  trust  created  by  a person  not  a resident  and  an 
estate  of  a person  not  a resident  shall  be  subject  to  tax  only  to  the  extent 
to  which  individuals  other  than  residents  are  liable  under  section  three 
hundred  and  fifty-nine,  subdivision  three. 

4.  In  cases  under  paragraphs  d and  e of  subdivision  one  of  this 
section  the  tax  shall  not  be  paid  by  the  fiduciary,  but  there  shall  be 
included  in  computing  the  net  income  of  each  beneficiary  his  distribu- 
tive share  whether  distributed  or  not,  of  the  net  income  of  the  estate 
or  trust  for  the  taxable  year,  or,  if  his  net  income  for  such  taxable 


38 


New  York  State  Personal  Income  Tax  Law 


year  is  computed  upon  the  basis  of  a period  different  from  that  upon 
the  basis  of  which  the  net  income  of  the  estate  or  trust  is  computed, 
then  his  distributive  share  of  the  net  income  of  the  estate  or  trust  for 
any  accounting  period  of  such  estate  or  trust  ending  within  the  fiscal 
or  calendar  year  upon  the  basis  of  which  such  beneficiary’s  net  income 
is  computed.  In  such  cases  the  income  of  a beneficiary  not  a resi- 
dent, derived  through  such  estate  or  trust,  shall  be  taxable  only  to 
the  extent  provided  in  section  three  hundred  and  fify-nine,  subdivision 
three,  for  individuals  other  than  residents. 

Sec.  366.  Information  and  Payment  at  Source. — 1.  For  the  calen- 
dar year  nineteen  hundred  and  twenty  and  for  each  calendar  year 
thereafter,  every  withholding  agent  shall  deduct  and  withhold  from 
all  salaries,  wages,  commissions,  gratuities,  emoluments,  perquisites 
and  other  fixed  or  determinable  annual  or  periodcial  compensation 
of  whatever  kind  and  in  whatever  form  paid  or  received,  earned  by 
any  taxpayer  for  personal  services  and  taxable  under  this  article,  of 
which  he  shall  have  control,  receipt,  custody,  disposal  or  payment, 
the  following  amounts:  one  per  centum  of  the  first  ten  thousand  dol- 
lars or  less,  two  per  centum  of  the  next  forty  thousand  dollars  or 
less,  and  three  per  centum  of  the  excess  over  fifty  thousand  dollars, 
by  which  the  amount  of  such  compensation  paid  or  to  be  paid  in  the 
calendar  year,  by  such  withholding  agent  to  such  taxpayer,  exceeds 
the  amount  of  the  exemptions  granted  to  such  taxpayer  under  sec- 
tion three  hundred  and  sixty-two  of  this  chapter  as  shown  by  a cer- 
tificate filed  with  the  withholding  agent  in  form  to  be  prescribed  by 
the  comptroller  or  one  thousand  dollars  if  no  certificate  showing  his 
personal  exemption  status  is  filed  with  the  withholding  agent  by  a 
taxpayer  other  than  a resident  of  this  state.  If  it  appears  that  another 
state  has  passed  a law  taxing  incomes  in  such  manner  as  will  result 
in  its  residents  being  entitled  to  credit  under  section  three  hundred 
and  sixty-three  hereof,  sufficient  to  offset  all  taxes  imposed  by  this 
article,  the  comptroller  may,  by  regulation,  relieve  residents  of  such 
state  from  being  required  to  make  any  return  under  this  article,  and 
may  prescribe  a form  of  certificate  to  be  filed  by  residents  of  such 
state  with  withholding  agents.  A withholding  agent  with  whom  such 
a certificate  shall  be  filed,  or  with  whom  a certificate,  in  such  form  as 
shall  be  prescribed  by  the  comptroller,  to  the  effect  that  the  person 
entitled  to  such  compensation  is  a resident  of  this  state  and  setting 
forth  his  residence  address,  shall  be  filed  after  the  beginning  of  the 
calendar  year  and  before  the  time  when  he  is  required  to  make  return 
and  payment,  need  not  deduct  or  withhold  anything  from  the  com- 
pensation of  the  person  filing  such  certificate.  The  comptroller  may, 
by  regulation,  require  withholding  agents  to  forward  to  him  at  stated 
times  any  of  the  certificates  mentioned  in  this  subdivision. 

2.  Every  withholding  agent  shall  make  return  to  the  comptroller 
of  complete  information  concerning  the  amount  of  all  interest,  rent, 
salaries,  wages,  premiums,  annuities,  compensations,  remunerations, 
emoluments  or  other  fixed  or  determinable  gains,  profils  and  income, 
except  interest  coupons  payable  to  bearer,  of  any  taxpayer  taxable 
under  this  article  of  one  thousand  dollars  or  more  in  any  taxable  year 


New  York  State  Personal  Income  Tax  Law 


39 


under  such  regulations  and  in  such  form  and  manner  and  to  such 
extent  as  may  be  prescribed  by  the  comptroller. 

3.  Every  withholding  agent  required  to  deduct  and  withhold  any 
tax  under  subdivision  one  of  this  section  shall  make  return  thereof 
on  or  before  the  fifteenth  day  of  March  in  each  year  and  shall  at  the 
same  time  pay  the  tax  to  the  comptroller.  Every  such  individual, 
corporation  or  partnership  is  hereby  made  liable  for  such  tax  and  is 
hereby  indemnified  against  the  claims  and  demands  of  any  individual, 
corporation  or  partnership  for  the  amount  of  any  payments  made  in 
accordance  with  the  provisions  of  this  section. 

4.  Income  upon  which  any  tax  is  required  to  be  withheld  at  the 
source  under  this  section  shall  be  included  in  the  return  of  the 
recipient  of  such  income,  but  any  amount  of  tax  so  withheld  shall 
be  credited  against  the  amount  of  income  tax  as  computed  in  such 
return. 

5.  If  any  tax  required  under  this  section  to  be  deducted  and  with- 
held is  paid  by  the  recipient  of  the  income,  it  shall  not  be  recollected 
from  the  withholding  agent;  nor  in  cases  in  which  the  tax  is  so  paid 
shall  any  penalty  be  imposed  upon  or  collected  from  the  recipient  of 
the  income  or  the  withholding  agent  for  failure  to  return  or  pay  the 
same,  unless  such  failure  was  fraudulent  and  for  the  purpose  of 
evading  payment. 

Sec.  367.  Taxpayers’  Returns. — Every  taxpayer  having  a net  in- 
come for  the  taxable  year  of  one  thousand  dollars  or  over  if  single 
or  if  married  and  not  living  with  husband  or  wife,  or  of  two  thousand 
dollars  or  over  if  married  and  living  with  husband  or  wife,  shall  make 
under  oath  a return  stating  specifically  the  items  of  his  gross  income 
and  the  deductions  and  credits  allowed  by  this  article.  If  a husband 
and  wife  living  together  have  an  aggregate  net  income  of  two  thou- 
sand dollars  or  over,  each  shall  make  such  a return  unless  the  income 
of  each  is  included  in  a single  joint  return.  If  the  taxpayer  is  unable 
to  make  his  own  return  the  return  shall  be  made  by  a duly  authorized 
agent  or  by  the  guardian  or  other  person  charged  with  the  care  of 
the  person  or  property  of  such  taxpayer.  A taxpayer  other  than  a 
resident  shall  not  be  entitled  to  the  deductions  authorized  by  section 
three  hundred  and  sixty  unless  he  shall  make  under  oath  a complete 
return  of  his  gross  income  both  within  and  without  the  state. 

Sec.  368.  Partnership  Returns. — Every  partnership  shall  make  a 
return  for  each  taxable  year,  stating  specifically  the  items  of  its  gross 
income  and  the  deductions  allowed  by  this  article,  and  shall  include 
in  the  return  the  names  and  addresses  of  the  individuals  who  would 
be  entitled  to  share  in  the  net  income  if  distributed  and  the  amount 
of  the  distributive  share  of  each  individual.  The  return  shall  be 
sworn  to  by  any  one  of  the  partners. 

Sec.  369.  Fiduciary  Returns. — Every  fiduciary  (except  receivers 
appointed  by  authority  of  law  in  possession  of  part  only  of  the 
property  of  a taxpayer)  shall  make  under  oath  a return  for  the  indi- 
vidual or  estate  or  trust  for  whom  he  acts,  as  follows: 


40 


New  York  State  Personal  Income  Tax  Law 


1.  If  he  acts  for  an  individual  whose  entire  income  from  what- 
ever source  derived  is  in  his  charge  and  the  net  income  of  such  indi- 
vidual is  one  thousand  dollars  or  over  if  single,  or  if  married  and  not 
living  with  husband  or  wife,  or  two  thousand  dollars  or  over  if  mar- 
ried and  living  with  husband  or  wife. 

2.  If  he  acts  (a)  for  an  estate  of  a deceased  person  during  the 
period  of  administration  or  settlement,  whether  or  not  the  income  of 
such  estate . during  such  period  of  administration  or  settlement  is 
properly  paid  or  credited  to  any  legatee,  heir  or  other  beneficiary; 
(b)  for  an  estate  or  trust  the  income  of  which  is  accumulated  in  trust 
for  the  benefit  of  unborn  or  unascertained  persons,  or  persons  with 
contingent  interests;  or  (c)  for  an  estate  or  trust  the  income  of  which 
is  held  for  future  distribution  under  the  terms  of  the  will  or  trust; 
and  the  net  income  of  such  estate  or  trust  is  one  thousand  dollars  or 
over. 

3.  If  he  acts  (a)  for  an  estate  or  trust  the  income  of  which  is  to 
be  distributed  to  the  beneficiaries  periodically;  or  (b)  as  the  guardian 
of  an  infant  whose  income  is  to  be  held  or  distributed  as  the  court 
may  direct;  and  any  beneficiary  of  such  estate  or  trust  receives  or 
is  entitled  to  a distributive  share  of  the  income  of  the  estate  or 
trust  of  one  thousand  dollars  or  more.  The  return  made  by  a fidu- 
ciary shall  state  specifically  the  items  of  the  gross  income  and  the 
deductions,  exemptions  and  credits  allowed  by  this  article.  Under 
such  regulations  as  the  comptroller  may  prescribe,  a return  made  by 
one  or  [sic.  Should  be  of]  two  or  more  joint  fiduciaries  shall  be  a 
sufficient  compliance  with  the  above  requirement.  The  fiduciary 
shall  make  oath  that  he  has  sufficient  knowledge  of  the  affairs  of 
the  individual,  estate  or  trust  for  whom  or  which  he  acts  to  enable 
him  to  make  the  return,  and  that  the  same  is,  to  the  best  of  his 
knowledge  and  belief,  true  and  correct. 

Fiduciaries  required  to  make  returns  under  this  article  shall  be 
subject  to  all  the  provisions  of  this  article  which  apply  to  taxpayers. 

Sec.  370.  Returns  When  Accounting  Period  Changed. — If  a tax- 
payer, with  the  approval  of  the  comptroller,  changes  the  basis  of 
computing  net  income  from  fiscal  year  to  calendar  year,  a separate 
return  shall  be  made  for  the  period  between  the  close  of  the  last 
fiscal  year  for  which  the  return  was  made  and  the  following  December 
thirty-first.  If  the  change  is  made  from  calendar  year  to  fiscal  year, 
a separate  return  shall  be  made  for  the  period  between  the  close 
of  the  last  calendar  year  for  which  return  was  made  and  the  date 
designated  as  the  close  of  the  fiscal  year.  If  the  change  is  made 
from  one  fiscal  year  to  another  fiscal  year,  a separate  return  shall 
be  made  for  the  period  between  the  close  of  the  former  fiscal  year 
and  the  date  designated  as  the  close  of  the  new  fiscal  year.  If  a 
taxpayer  making  his  first  return  for  income  tax  keeps  his  accounts 
on  the  basis  of  a fiscal  year,  he  shall  make  a separate,  return  for  the 
period  between  the  beginning  of  a calendar  year  in  which  such 
calendar  year  ends  and  the  end  of  such  fiscal  year. 


New  York  State  Personal  Income  Tax  Law 


41 


In  all  of  the  above  cases  the  net  income  shall  be  computed  on 
the  basis  of  such  period  for  which  separate  return  is  made,  and  the 
tax  shall  be  paid  thereon  at  the  rate  for  the  calendar  year  in  which 
such  period  is  included;  and  the  exemptions  allowed  in  this  article 
shall  be  reduced  respectively  to  amounts  which  bear  the  same  ratio 
to  the  full  exemptions  provided  for  as  the  number  of  months  in  such 
period  bears  to  twelve  months. 

Sec.  371.  Time  and  place  of  filing  returns. — Returns  shall  be 
made  to  the  comptroller  on  or  before  the  fifteenth  day  of  the  fourth 
month  following  the  close  of  the  fiscal  year,  or  if  the  return  is  made 
on  the  basis  of  the  calendar  year,  then  the  return  shall  be  made  on 
or  before  the  fifteenth  day  of  April  in  each  year.  The  comptroller 
may  grant  a reasonable  extension  of  time  for  filing  returns  whenever 
in  his  judgment  good  cause  exists  and  shall  keep  a record  of  every 
such  extension  and  the  reason  therefor.  Except  in  the  case  of  tax- 
payers who  are  abroad,  no  such  extension  shall  be  granted  for  more 
than  six  months.  Such  returns  shall,  so  far  as  may  be,  set  forth  the 
same  or  similar  items  called  for  in  the  blank  forms  of  return  pre- 
scribed by  the  United  States  commissioner  of  internal  revenue  for 
the  enforcement  of  the  act  of  congress  known  as  the  revenue  act  of 
nineteen  hundred  and  eighteen,  together  with  such  other  facts  as 
the  comptroller  may  deem  necessary  for  the  proper  enforcement  of 
this  article.  There  shall  be  annexed  to  such  return  the  affidavit  or 
affirmation  of  the  person  making  the  return,  to  the  effect  that  the 
statements  contained  therein  are  true.  Blank  forms  of  returns  shall 
be  furnished  by  the  comptroller  upon  application,  but  failure  to 
secure  the  form  shall  not  relieve  any  taxpayer  from  the  obligation 
of  making  any  return  herein  required. 

Sec.  372.  Administration  of  Income  Tax  Law. — The  comptroller 
shall  administer  and  enforce  the  tax  herein  imposed  for  which  pur- 
pose he  may  divide  the  state  into  districts  in  each  of  which  a branch 
office  of  the  comptroller  may  be  maintained;  provided  that  in  no 
cases  shall  a county  be  divided  in  forming  a district. 

Sec.  373.  Powers  of  comptroller. — 1.  If  in  the  opinion  of  the 
comptroller,  any  return  of  a taxpayer  is  in  any  essential  respect 
incorrect,  he  shall  have  power  to  revise  such  return,  or  if  any  tax- 
payer fails  to  make  return  as  herein  required,  the  comptroller  is 
authorized  to  make  an  estimate  of  the  taxable  income  of  such  tax- 
payer from  any  information  in  his  possession,  and  to  audit  and  state 
an  account  according  to  such  revised  return  of  the  estimate  so  made 
by  him  for  the  taxes,  penalties  and  interest  due  the  state  from  such 
taxpayer.  Except  in  the  case  of  a wilfully  false  or  a fraudulent 
return  with  intent  to  evade  the  tax,  the  amount  of  tax  due  under  any 
return  shall  be  determined  by  the  comptroller  within  three  years  after 
the  return  was  due  or  was  made.  In  the  case  of  such  wilfully  false 
or  fraudulent  returns  the  amount  of  tax  due  may  be  determined  at 
any  time  after  the  return  is  filed  and  the  tax  may  be  collected  at  any 
time  after  it  becomes  due. 


42 


New  York  State  Personal  Income  Tax  Law 


2.  The  comptroller,  for  the  purpose  of  ascertaining  the  correct- 
ness of  any  return  or  for  the  purpose  of  making  an  estimate  of  tax- 
able income  of  any  person  where  information  has  been  obtained, 
shall  also  have  power  to  examine  or  cause  to  have  examined,  by 
any  agent  or  representative  designated  by  him  for  that  purpose,  any 
books,  papers,  records  or  memoranda  bearing  upon  the  matters  re- 
quired to  be  included  in  the  return,  and  may  require  the  attendance 
of  the  person  rendering  the  return  or  any  officer  or  employee  of  such 
person,  or  the  attendance  of  any  other  person  having  knowledge  in 
the  premises,  and  may  take  testimony  and  require  proof  material  for 
his  information,  with  power  to  administer  oaths  to  such  person  or 
persons. 

Sec.  373-a.  Oaths  and  Acknowledgments. — The  director  of  the 
income  tax  bureaus,  and  each  assistant,  deputy  and  district  director, 
and  each  cashier,  senior  auditor,  auditor  and  junior  auditor  of  the 
income  tax  bureau,  shall  have  the  power  to  administer  an  oath  to  any 
person,  or  to  take  the  acknowledgment  of  any  person  in  respect  of 
any  income  tax  report  or  return  required  by  or  pursuant  to  this  article, 
or  the  rules  and  regulations  of  the  comptroller. 

Sec.  374.  Revision  and  Readjustment  of  Accounts  by  Comp- 
troller.— If  an  application  for  revision  be  filed  with  the  comptroller  by 
a taxpayer  within  one  year  from  the  time  of  the  filing  of  the  return, 
or  if  the  tax  of  such  taxpayer  shall  have  been  recomputed,  then  from 
the  time  of  such  recomputation,  the  comptroller  shall  grant  a hear- 
ing thereon  and  if  it  shall  be  made  to  appear,  upon  any  such  hearing 
by  evidence  submitted  to  him  or  otherwise,  that  any  such  computation 
includes  taxes  or  other  charges  which  could  not  have  been  lawfully 
demanded,  or  that  payment  has  been  illegally  made  or  exacted  of 
any  such  amount  so  computed,  the  comptroller  shall  resettle  the  same 
according  to  law  and  the  facts,  and  adjust  the  computation  of  taxes 
accordingly,  and  shall  send  notice  of  his  determination  thereon  to  the 
taxpayer. 

Sec.  375.  Review  of  Determination  of  Comptroller  by  Certiorari 
and  Regulations  as  to  Writ. — The  determination  of  the  comptroller 
upon  any  application  made  to  him  by  any  taxpayer  for  revision  and 
resettlement  of  any  computation  of  tax,  as  prescribed  by  this  article, 
may  be  reviewed  in  the  manner  prescribed  by  and  subject  to  the  pro- 
visions of  section  one  hundred  and  ninety-nine  of  this  chapter.  No 
certiorari  to  review  any  statement  of  a computation  or  any  determi- 
nation by  the  comptroller  under  this  article  shall  be  granted  unless 
notice  of  application  therefor  is  made  within  thirty  days  after  the 
service  of  the  notice  of  such  determination.  Eight  days’  notice  shall 
be  given  to  the  comptroller  of  the  application  for  such  writ.  Before 
making  the  application  an  undertaking  must  be  filed  with  him,  in 
such  amount  and  with  such  sureties  as  a justice  of  the  supreme  court 
shall  approve,  to  the  effect  that  if  such  writ  is  dismissed  or  the  deter- 
mination of  the  comptroller  affirmed,  the  applicant  for  the  writ  will 
pay  all  costs  and  charges  which  may  accrue  against  him  in  the  prose- 
cution of  the  writ,  including  costs  of  all  appeals. 


New  York  State  Personal  Income  Tax  Law 


43 


Sec.  376.  Penalties,  Additional  Taxes  and  Interest. — 1.  If  any  tax- 
payer, without  intent  to  evade  any  tax  imposed  by  this  article,  shall 
fail  to  make  a return  of  income  or  pay  any  tax  if  one  is  due  at  the 
time  required  by  or  under  the  provisions  of  this  article,  but  shall 
voluntarily  make  a correct  return  of  income  and  pay  the  tax  due 
within  sixty  days  thereafter,  there  shall  be  added  to  the  tax  an 
additional  amount  equal  to  five  per  centum  thereof,  but  such  addi- 
tional amount  shall  in  no  case  be  less  than  two  dollars,  and  an  addi- 
tional one  per  centum  for  each  month  or  fraction  of  a month  during 
which  the  tax  remains  unpaid.  If  any  withholding  agent,  without  in- 
tent to  evade  any  tax  imposed  by  this  article,  shall  fail  to  make  a 
return  and  pay  a tax  withheld  by  him  at  the  time  required  by  or  under 
the  provisions  of  this  article,  but  shall  voluntarily  make  a correct 
return  and  pay  the  tax  due  within  sixty  days  thereafter,  the  with- 
holding agent  shall  pay,  and  may  not  charge  to  the  taxpayer,  an  addi- 
tional amount  equal  to  five  per  centum  thereof,  but  such  additional  amount 
shall  in  no  case  be  less  than  two  dollars,  and  an  additional  one  per  centum 
for  each  month  or  fraction  of  a month  during  which  the  tax  remains 
unpaid. 

2.  If  any  taxpayer  fails  voluntarily  to  make  a return  of  income 
or  to  pay  a tax  if  one  is  due  within  sixty  days  of  the  time  required 
by  or  under  the  provisions  of  this  article,  the  tax  shall  be  doubled  and 
such  double  tax  shall  be  increased  by  one  per  centum  for  each  month 
or  fraction  of  a month  from  the  time  the  tax  was  originally  due  to  the 
date  of  payment. 

3:  Any  individual,  corporation  or  partnership,  who,  without 
fraudulent  intent,  shall  fail  to  pay,  or  to  deduct  or  withhold  and  pay 
any  tax,  or  to  make,  render,  sign  or  verify  any  return,  or  to  supply 
any  information,  within  the  time  required  by  or  under  the  provisions 
of  this  article,  shall  be  liable  to  a penalty  of  not  more  than  one 
thousand  dollars,  to  be  recovered  by  the  attorney-general  in  the 
name  of  the  people  by  action  in  any  court  of  competent  jurisdiction. 

4.  Any  individual,  corporation  or  partnership,  or  any  officer  or 
employee  of  any  corporation,  or  member  or  employee  of  any  part- 
nership, who,  with  intent  to  evade  any  tax  or  any  requirement  of  this 
article  or  any  lawful  requirement  of  the  comptroller  thereunder,  shall 
fail  to  pay  the  tax,  or  to  make,  render,  sign  or  verify  any  return, 
or  to  supply  any  information,  within  the  time  required  by  or  under 
the  provisions  of  this  article,  or  who,  with  like  intent,  shall  make, 
render,  sign  or  verify  any  false  or  fraudulent  return  or  statement, 
or  shall  supply  any  false  or  fraudulent  information,  shall  be  liable 
to  a penalty  of  not  more  than  one  thousand  dollars,  to  be  recovered 
by  the  attorney-general,  in  the  name  of  the  people,  by  action  in  any 
court  of  competent  jurisdiction,  and  shall  also  be  guilty  of  a misde- 
meanor and  shall,  upon  conviction,  be  fined  not  to  exceed  one  thou- 
sand dollars  or  be  imprisoned  not  to  exceed  one  year,  or  both,  at 
the  discretion  of  the  court. 

5.  The  attorney-general  shall  have  the  power,  with  the  consent 
of  the  comptroller,  to  compromise  any  penalty  for  which  he  is  author- 


44 


New  York  State  Personal  Income  Tax  Law 


ized  to  bring  action  under  subdivisions  three  and  four  of  this  section. 
The  penalties  provided  by  subdivisions  three  and  four  of  this  section 
shall  be  additional  to  all  other  penalties  in  this  article  provided. 

b.  The  failure  to  do  any  act  required  by  or  under  the  provisions 
of  this  article  shall  be  deemed  an  act  committed  in  part  at  the 
office  of  the  comptroller  in  Albany.  The  certificate  of  the  comptroller 
to  the  effect  that  a tax  has  not  been  paid,  that  a return  has  not  been 
filed,  or  that  information  has  not  been  supplied,  as  required  by  or 
under  the  provisions  of  this  article,  shall  be  prima  facie  evidence  that 
such  tax  has  not  been  paid,  that  such  return  has  not  been  filed,  or  that 
such  information  has  not  been  supplied. 

Sec.  377.  When  Payable. — 1.  Each  taxpayer  shall,  or  in  cases 
where  an  agent  or  a guardian  or  other  fiduciary  makes  return  for  the 
taxpayer  on  whose  behalf  he  is  acting,  then  the  agent,  guardian  or 
other  fiduciary  shall,  at  the  time  of  filing  his  return,  pay  to  the 
comptroller  the  amount  of  tax  payable  hereunder  as  the  same  shall 
appear  from  the  face  of  the  return.  If  the  time  for  filing  the  return 
shall  be  extended,  he  shall  pay  in  addition  interest  thereon  at  the  rate 
of  six  per  centum  per  annum  from  the  time  when  the  return  was 
originally  required  to  be  filed  to  the  time  of  payment.  If  the  time  for 
filing  a return  by  a withholding  agent  shall  be  extended,  the  with- 
holding agent  shall  pay,  and  may  not  charge  to  the  taxpayer,  interest 
at  the  rate  of  six  per  centum  per  annum  from  the  time  when  the 
return  was  originally  required  to  be  filed  to  the  time  of  payment. 

2.  As  soon  as  practicable  after  the  return  is  filed,  the  comptroller 
shall  examine  it  and  compute  the  tax. 

3.  If  the  amount  of  tax  as  computed  shall  be  greater  than  the 
amount  theretofore  paid,  the  excess  shall  be  paid  by  the  taxpayer  to 
the  comptroller  within  ten  days  after  the  amount  of  the  tax  as  com- 
puted shall  be  mailed  by  the  comptroller.  In  such  case,  if  the  return 
is  made  in  good  faith  and  the  understatement  of  the  amount  in  the 
return  is  not  due  to  any  fault  of  the  taxpayer,  there  shall  be  no  penalty 
or  additional  tax  because  of  such  understatement,  but  interest  shall 
be  added  to  the  amount  of  the  deficiency  at  the  rate  of  one  per  centum 
for  each  month  or  fraction  of  a month.  If  the  understatement  is  due 
to  negligence  on  the  part  of  the  taxpayer,  but  without  intent  to  de- 
fraud, there  shall  be  added  to  the  amount  of  the  deficiency  five  per 
centum  thereof,  and  in  addition,  interest  at  the  rate  of  one  per  centum 
per  month  for  each  month  or  fraction  of  a month.  If  the  under- 
statement is  false  or  fraudulent  with  intent  to  evade  the  tax,  the  tax 
on  the  additional  income  discovered  to  be  taxable  shall  be  doubled 
and  an  additional  one  per  centum  shall  be  added  to  the  amount  so 
due  for  each  month  or  fraction  of  a month.  The  interest  provided 
for  in  this  subdivision  shall  in  all  cases  be  computed  from  the  date  the 
tax  was  originally  due  to  the  date  of  payment. 

4.  If  the  amount  of  tax  as  computed  shall  be  less  than  the  amount 
theretofore  paid,  the  excess  shall  be  refunded  by  the  comptroller  out 
of  the  proceeds  of  the  tax  retained  by  him  as  provided  in  this  article. 


New  York  State  Personal  Income  Tax  Law 


45 


Sec.  378.  Notice  of  Assessment.  [Repealed  by  Chap.  691,  Laws 
of  1920,  in  effect  May  10,  1920.] 

Sec.  379.  Collection  of  Taxes;  Penalties  and  Interest. — 1.  The 

comptroller  is  authorized  at  his  discretion  to  designate  agents  for  the 
purpose  of  collecting  income  taxes  and  shall  require  from  them  rea- 
sonable bond. 

2.  The  comptroller  shall  have  power,  upon  making  a record  of 
his  reasons  therefor,  to  waive  or  reduce  any  of  the  additional  taxes 
or  interest  provided  in  section  three  hundred  and  seventy-six,  sub- 
divisions one  and  two,  and  section  three  hundred  and  seventy-seven, 
subdivision  three,  of  this  article,  or  to  compromise  the  same. 

Sec.  380.  Warrant  for  the  Collection  of  Taxes. — If  any  tax 
imposed  by  this  article  or  any  portion  of  such  tax  be  not  paid  within 
sixty  days  after  the  same  becomes  due,  the  comptroller  shall  issue 
a warrant  under  his  hand  and  official  seal  directed  to  the  sheriff  of  any 
county  of  the  state  commanding  him  to  levy  upon  and  sell  the  real 
and  personal  property  of  the  person  owning  the  same,  found  within 
his  county,  for  the  payment  of  the  amount  thereof,  with  the  added 
penalties,  interest  and  the  cost  of  executing  the  warrant,  and  to  return 
such  warrant  to  the  comptroller  and  pay  to  him  the  money  collected 
by  virtue  thereof  by  a time  to  be  therein  specified,  not  less  than  sixty 
days  from  the  date  of  the  warrant.  The  sheriff  shall  within  five  days 
after  the  receipt  of  the  warrant,  file  with  the  clerk  of  his  county  a 
copy  thereof,  and  thereupon  the  clerk  shall  enter  in  the  judgment 
docket,  in  the  column  for  judgment  debtors,  the  name  of  the  taxpayer 
mentioned  in  the  warrant,  and  in  appropriate  columns  the  amount 
of  the  tax  or  portion  thereof  and  penalties  for  which  the  warrant 
is  issued  and  the  date  when  such  copy  is  filed,  and  thereupon  the 
amount  of  such  warrant  so  docketed  shall  become  a lien  upon  the  title 
to  and  interest  in  real  property  or  chattels  real  of  the  person  against 
whom  it  is  issued  in  the  same  manner  as  a judgment  duly  docketed 
in  the  office  of  such  clerk.  The  said  sheriff  shall  thereupon  proceed 
upon  the  same  in  all  respects,  with  like  effect,  and  in  the  same  manner 
prescribed  by  law  in  respect  to  executions  issued  against  property 
upon  judgments  of  a court  of  record,  and  shall  be  entitled  to  the 
same  fees  for  his  services  in  executing  the  warrant,  to  be  collected 
in  the  same  manner.  In  the  discretion  of  the  comptroller  a warrant 
of  like  terms,  force  and  effect  may  be  issued  and  directed  to  any 
agent  authorized  to  collect  income  taxes,  and  in  the  execution  thereof, 
such  agent  shall  have  all  the  powers  conferred  by  law  upon  sheriffs, 
but  shall  be  entitled  to  no  fee  or  compensation  in  excess  of  actual 
expenses  paid  in  the  performance  of  such  duty.  If  a warrant  be  re- 
turned not  satisfied  in  full,  the  comptroller  shall  have  the  same 
remedies  to  enforce  the  claim  for  taxes  against  the  taxpayer  as  if 
the  people  of  the  state  had  recovered  judgment  against  the  taxpayer 
for  the  amount  of  the  tax. 

Sec.  381.  Action  for  Recovery  of  Taxes. — Action  may  be  brought 
at  any  time  by  the  attorney-general  of  the  state  at  the  instance  of  the 
comptroller,  in  the  name  of  the  state,  to  recover  the  amount  of  any 
taxes,  penalties  and  interest  due  under  this  article. 


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Sec.  382.  Distribution  of  the  Income  Tax. — Of  the  revenue  col- 
lected under  this  article  the  comptroller  shall  retain  in  his  hands  suffi- 
cient to  provide  at  all  times  a fund  in  his  hands  in  the  sum  of  two 
hundred  and  fifty  thousand  dollars  out  of  which  he  shall  pay  any 
refunds  to  which  taxpayers  shall  be  entitled  under  the  provisions  of 
this  article.  Of  the  remainder,  fifty  per  centum  shall  be  paid  into  the 
state  treasury  to  the  credit  of  the  general  fund.  The  remaining  fifty 
per  centum  thereof  shall,  not  later  than  the  first  day  of  July,  and  in 
case  of  moneys  subsequently  collected  at  least  quarterly  thereafter, 
be  distributed  and  paid  to  the  treasurers  of  the  several  counties  of  the 
state,  in  the  proportion  that  the  assessed  valuation  of  the  real  property 
of  each  county  bears  to  the  aggregate  assessed  valuation  of  the  real 
property  of  the  state.  As  to  any  county  included  in  the  city  of  New 
York  such  payment  shall  be  made  to  the  receiver  of  taxes  in  such  city 
and  be  paid  into  the  general  fund  for  the  reduction  of  taxation  of  the 
City  of  New  York.  The  county  treasurer  shall  apportion  the  amount 
so  received  among  the  several  towns  and  cities  within  the  county, 
except  a city  containing  a part  of  a town,  in  proportion  that  the 
assessed  valuation  of  the  real  property  of  each  town  or  city  bears 
to  the  aggregate  assessed  valuation  of  the  real  property  of  the  county. 
The  county  treasurer  shall  pay  the  amount  so  apportioned  to  each 
city  to  the  chief  fiscal  officer  of  the  city  to  be  paid  into  the  general 
fund  for  city  purposes;  and  in  a county  having  a population  of  over 
three  hundred  thousand  according  to  the  last  federal  or  state  census 
and  adjoining  a city  of  the  first  class  having  a population  of  one 
million  and  upwards,  the  county  treasurer  shall  pay  the  amount  so 
apportioned  to  the  supervisor  of  the  town  and  such  amount  shall  be 
by  him  credited  to  general  town  purposes,  and  such  amounts  shall 
not  be  appqrtioned  as  hereinafter  provided.  If  a town  does  not  con- 
tain any  part  of  a city  or  village,  the  county  treasurer  shall  pay  the 
amount  so  apportioned  to  the  town  to  the  supervisor  of  the  town  and 
such  amount  shall  be  by  him  credited  to  general  town  purposes. 
If  one  or  more  incorporated  villages  or  cities  be  wholly  or  partly 
within  a town,  the  county  treasurer  shall  divide  the  amount  appor- 
tioned to  such  town  between  such  town  and  such  village,  villages  or 
city  in  the  proportions  that  the  assessed  valuations  of  the  real  prop- 
erty of  such  town,  as  appears  by  the  last  preceding  town  assessment- 
rjll,  and  of  the  real  property  of  such  village,  villages  or  city,  or 
the  portion  thereof  wholly  within  such  town,  as  appears  by  the  last 
preceding  village  or  city  assessment-roll,  bear  respectively  to  the 
aggregate  assessed  valuation  of  the  real  property  of  such  town  and 
of  such  village,  villages  or  city,  determined  by  adding  together  the 
assessed  valuation  of  the  real  property  of  the  town,  as  appears  by  the 
last  preceding  town  assessment-roll  and  the  assessed  valuation  of  the 
real  property  of  such  village,  villages  or  city,  or  the  portion  thereof 
wholly  within  such  town,  as  appears  by  the  last  preceding  village 
or  city  assessment-roll,  as  the  case  may  be.  If  two  or  more  villages 
be  entitled  to  share  in  such  division,  the  county  treasurer  shall 
divide  between  them  the  amount  to  which  they  are  entitled  in  the 
proportion  that  the  assessed  valuation  of  the  real  property  of  such 
villages  located  in  the  town,  as  appears  by  the  last  preceding  village 


New  York  State  Personal  Income  Tax  Law 


47 


assessment-rolls  bears  to  the  aggregate  assessed  valuations  of  the 
real  property  of  such  villages  located  in  such  town,  as  so  determined. 
The  county  treasurer  shall  pay  over  to  the  chief  fiscal  officer  or 
officers  of  such  village  or  villages  or  such  city  the  amount  to  which 
such  village,  villages  or  city  is  entitled  in  accordance  with  the  above 
apportionment,  and  shall  pay  the  remaining  portion  thereof  to  the 
supervisor  of  the  town  and  such  amount  shall  be  by  him  credited  to 
general  town  purposes. 

Sec.  383.  Comptroller  to  Make  Regulations  and  to  Collect  Facts. 

— The  comptroller  is  hereby  authorized  to  make  such  rules  and  regu- 
lations, and  to  require  such  facts  and  information  to  be  reported; 
as  it  [sic]  may  deem  necessary  to  enforce  the  provisions  of  this 
article. 

Sec.  384.  Secrecy  Required  of  Officials;  Penalty  for  Violation. — 

1.  Except  in  accordance  with  proper  judicial  order  or  as  otherwise 
provided  by  law,  it  shall  be  unlawful  for  the  comptroller,  any  agent, 
clerk  or  other  officer  or  employee  to  divulge  or  make  known  in  any 
manner  the  amount  of  income  or  any  particulars  set  forth  or  disclosed 
in  any  report  or  return  required  under  this  article.  Nothing  herein 
shall  be  construed  to  prohibit  the  publication  of  statistics  so  classified 
as  to  prevent  the  identification  of  particular  reports  or  returns  and 
the  items  thereof,  or  the  inspection  by  the  attorney-general  or  other 
legal  representatives  of  the  state  of  the  report  or  return  of  any  taxpayer 
who  shall  bring  action  to  set  aside  or  review  the  tax  based  thereon,  or 
against  whom  an  action  or  proceeding  has  been  instituted  in  accord- 
ance with  the  provisions  of  sections  three  hundred  and  eighty  and 
three  hundred  and  eighty-one  of  this  chapter.  Reports  and  returns 
shall  be  preserved  for  three  years  and  thereafter  until  the  comptroller 
orders  them  to  be  destroyed. 

2.  Any  offense  against  subdivision  one  of  this  section  shall  be 
punished  by  a fine  not  exceeding  one  thousand  dollars  or  by  imprison- 
ment not  exceeding  one  year,  or  both,  at  the  discretion  of  the  court, 
and  if  the  offender  be  an  officer  or  employee  of  the  state  he  shall  be 
dismissed  from  office  and  be  incapable  of  holding  any  public  office 
in  this  state  for  a period  of  five  years  thereafter. 

3.  Notwithstanding  the  provisions  of  this  section,  the  comptroller 
may  permit  the  commissioner  of  internal  revenue  of  the  United 
States,  or  the  proper  officer  of  any  state  imposing  an  income  tax 
upon  the  incomes  of  individuals,  or  the  authorized  representative 
of  either  such  officer,  to  inspect  the  income  tax  returns  of  any  indi- 
viduals, or  may  furnish  to  such  officer  or  his  authorized  representa- 
tive an  abstract  of  the  return  of  income  of  any  individual  or  supply 
him  with  information  concerning  any  item  of  income  contained  in 
any  return,  or  disclosed  by  the  report  of  any  investigation  of  the 
income  or  return  of  income  of  any  individual;  but  such  permission 
shall  be  granted  or  such  information  furnished  to  such  officer  or  his 
representative  only  if  the  statutes  of  the  United  States  or  of  such 
other  state,  as  the  case  may  be,  grant  substantially  similar  privileges 
to  the  proper  officer  of  this  state  charged  with  the  administration 
of  the  personal  income  tax  law  thereof. 


48 


New  York  State  Personal  Income  Tax  Law 


Sec.  385.  Contract  to  Assume  Income  Tax  Illegal. — It  shall  be 
unlawful  for  any  person  to  agree  or  contract  directly  or  indirectly  to 
pay  or  assume  or  bear  the  burden  of  any  tax  payable  by  any  tax- 
payer under  the  provisions  of  this  article.  Any  such  contract  or 
agreement  shall  be  null  and  void  and  shall  not  be  enforced  or  given 
effect  by  any  court. 

Section  2.  [Invalidating  Clause.] — If  any  clause,  sentence,  para- 
graph, or  part  of  this  act  shall  for  any  reason  be  adjudged  by  any 
court  of  competent  jurisdiction  to  be  invalid,  such  judgment  shall 
not  affect,  impair,  or  invalidate  the  remainder  of  this  act,  but  shall 
be  confined  in  its  operation  to  the  clause,  sentence,  paragraph,  or  part 
thereof  directly  involved  in  the  controversy  in  which  such  judgment 
shall  have  been  rendered. 

Sec.  3.  [Personal  Property  Taxes.] — An  assessment  on  account 
of  personal  property  made  prior  to  August  first,  nineteen  hundred  and 
nineteen,  shall  be  as  valid  and  effectual  as  if  this  act  had  not  been 
passed,  and  nothing  in  this  act  shall  be  construed  to  impair  the  obli- 
gation to  pay  taxes  assessed  on  account  of  personal  property  in  the 
year  nineteen  hundred  and  eighteen  or  the  year  nineteen  hundred  and 
nineteen  prior  to  August  first  whether  payable  in  that  year  or  not. 

Sec.  4.  [Revision  of  City  Estimates  for  1920.] — If  in  any  city 

entitled  to  receive  a portion  of  the  taxes  collected  under  article  six- 
teen of  the  tax  law  as  added  by  this  act  the  budget  for  the  fiscal  year 
current  on  July  first,  nineteen  hundred  and  twenty,  shall  be  completed 
prior  to  that  date,  the  board  of  estimate  and  apportionment  or  other 
board  or  body  having  the  duty  of  preparing  the  budget  in  such  city 
shall  have  the  power  subsequent  to  such  date  and  before  the  levy  of 
the  taxes  on  account  of  the  appropriations  made  by  such  budget  to 
revise  the  estimates  of  city  revenue  so  as  to  include  in  such  calcula- 
tion the  income  to  the  city  from  taxes  collected  under  article  sixteen 
of  the  tax  law  as  added  by  this  act. 

Sec.  5.  [Appropriations  and  Personnel.]— Section  1,  Chapter  8, 
Laws  of  1920,  in  effect  February  18,  1920,  reads  as  follows:  “The  sum 
of  five  hundred  thousand  dollars  ($500,000),  or  so  much  thereof  as 
may  be  necessary,  is  hereby  appropriated  out  of  any  moneys  in  the 
state  treasury  not  otherwise  appropriated,  for  the  expenses  of  the 
state  comptroller  to  be  incurred  in  administering  the  provisions  of 
chapter  six  hundred  and  twenty-seven  of  the  laws  of  nineteen  hundred 
and  nineteen,  entitled  “An  act  to  amend  the  tax  law,  in  relation  to 
imposing  taxes  upon  and  with  respect  to  incomes,”  but  no  new  posi- 
tion shall  be  created  nor  salary  fixed  or  changed  except  with  the 
unanimous  approval  of  the  governor,  the  chairman  of  the  senate 
finance  committee  and  the  chairman  of  the  assembly  ways  and  means 
committee.” 

Sec.  6.  [Effective  Date.] — Except  as  otherwise  provided  herein 
this  act  shall  take  effect  immediately.  (May  14,  1919.) 


COLUMBIA 

TRUST 

COMPANY 


